The Oxford Handbook of Corporate Social Responsibility: Psychological and Organizational Perspectives 9780198802280, 0198802285

Table of contents :
Cover
The oxford handbook of CORPORATE SOCIAL RESPONSIBILITY: Psychological and Organizational Perspectives
Copyright
Contents
List of Figures
List of Tables
List of Contributors
PartI: INTRODUCTION
Chapter I: New Developments in the study of corporate social responsibility
The big picture
Micro CSR and human resource management
CSR, Enironment, and sustainability
Entrepreneurship/social entrepreneurship
Strategy and governance
Business ethics and responsibility
References
Part II: MICRO/HR ISSUES
Chapter 2: The psychology of CSR
Introduction
Chapter Overview
Stakeholders' CSR evaluations
CSR Awareness, Knowledge, Perceptions, and Appraisals
CSR awareness and CSR knowledge
CSR perceptions and CSR appraisals
CSR Practices and CSR Evaluations Studied in Micro CSR Research
CSR practices and evaluations in employee research
CSR practices and evaluations in job seeker research
CSR practices and evaluations in consumer research
Future research on CSR perceptions and appraisals
Stakeholder respomses to CSR
“How” do Stakeholders Respond to CSR?
Employee responses
Job seeker responses
Consumer responses
“Why” do Stakeholders Respond to CSR?
A C-S-R considerations framework
Mechanisms that help explain employee responses
Mechanisms that help explain job seeker responses
Mechanisms that help explain consumer responses
“When” do Stakeholders Respond to CSR?
Stakeholders' CSR awareness
Research on CSR Awareness: Its Levels and Effects among Different Stakeholders
CSR awareness among employees
CSR awareness among job seekers
CSR awareness among consumers
Implications of CSR Awareness and Future Research Needs
Implications for practice
Approaches to measure and study CSR knowledge and awareness
Specificity and depth of CSR knowledge and awareness
Conclusions
Acknowledgments
References
Chapter 3: Good intentions are not enough: Applying Best Practices from Humanitarian Aid to Evaluate Corporate Social Responsibility
The imnportance of for-profit organizations to human progress
Why evaluate CSR's impact on its intended beneficiaries?
Criteria for evaluating the imapct of CSR initiatives on intended beneficiaries
Managing for Results
Ownership
Alignment
Harmonization
Mutual Accountability
More than just good intentions
Not All CSR Initiatives are Created Equal
Conclusion
References
Chapter 4: Corporate social responsibility and meaningful work
The experience of meaningful work
Workplace Antecedents of Meaningful Work
How corporate social responsibility affects meaningful work
CSR Expectations
CSR Assessments
CSR Attributions
CSR Responses
Boundary Conditions on the Effects of CSR on Meaningful Work
Employees’ agreement with stakeholder expectations, assessments, and attributions
Employees’ perceived control over harms and benefits
Employees’ identification with the target of CSR attributions
Employees’ perceived personal growth through CSR involvement
Summary, implications, and conclusions
Dynamic Influence of CSR on Meaningful Work
The Dark Side of CSR: Uncertainty, Meaningful Work, and CSR Effectiveness
Conclusion
References
Chapter 5: Diversity and corporate social responsibility: Exploring the Potential Connections between Top Management Team/Board Diversity, CSR, and Workforce Diversity
Corporate social responsibility
Understanding the effects of diversity
Consequences of Diversity
Potential difficulties/costs associated with diversity in a group or organization
Moderating Factors
The potential effects of specific types of diversity on Csr
Gender Diversity
Racial, Ethnic, and Cultural Diversity
Age Diversity
Deep-level diversity
The potential effects of Csr on workforce diversity
Conclusion
Acknowledgment
References
Chapter 6: Responsible business and individual differences: Employee Externally-Directed Citizenship and Green Behaviors
Individual behaviors contributing to CSR: Employee resonsible behaviors
CSR-Related Employee Behaviors as Job Performance
Externally-directed employee citizenship behaviors
Definition of Externally-Directed Employee Citizenship Behaviors
Facets of Externally-Directed Employee Citizenship Behaviors
Measuring Externally-Directed Employee Citizenship Behaviors
Dispositional Antecedents of Externally-Directed Employee Citizenship Behaviors
Employee green behaviors
Defining Employee Green Behaviors
Models of Employee Green Behaviors
Resource-based models
Context-based models
OCB-based models of green behavior
The Green Five taxonomy
Measuring Employee Green Behaviors
Dispositional Antecedents of Employee Green Behaviors
Conclusions
Acknowledgments
References
Chapter 7: Corporate volunteering: Who Really Wins?
Background to corporate volunteering
History of CV
The Growth of CV
Nature of CV Activities
Academic research findings
Outcomes of Volunteering at the Organizational Level
Outcomes of Volunteering at the Individual Level
Critiques of corporate volunteering
The Dominance of the Business Case Discourse
Political Role of CV: CV as a Tool for Reducing Government Expenditure
Future of Cv: practitioner and academic perspectives
References
Chapter 8: Corporate social irresponsibility in spite of efforts to act responsibily: The Nature, Measurement, and Contextual Antecedents of CSR and CSiR by Organizations
Introduction
The nature of corporate social irresponsibility
Measurement of corporate social irresponsibility
Unidimensional Proxy Measures
Composite-Aggregate Measures
Subjectivity
Theoretical rationale
Context
Benchmarks
Perceptual Measures
Managerial perceptions
Employee perceptions
Antecedents of corporate social irresponsibility
Pressure
Incentive Systems
Organizational Climate
Ethical climate
Diversity climate
Organizational Culture and Leadership
Organizational culture
Leadership
Coordinated culture and leadership
Governance
Regulation
Where do we go from here?
Research Implications
Practical Implications
Conclusion
References
Chapter 9: When CSR backfires: Understanding Stakeholders’ Negative Responses to Corporate Social Responsibility
Introduction
Stakeholder reactions: Exploring the psychology of CSR
Emphasis to Date on the Positive Effects of CSR
Positive Responses to CSR are Only Part of the Story
Is there Evidence that Stakeholders React Negatively to CSR?
When CSR backfires with consumers
When CSR backfires among employees and job seekers
Conceptualizing and assessing negative reactions to CSR
What are the Reactions?
CSR cynicism
Skepticism toward CSR claims
Directions for future research
Theories and Frameworks
Attribution theory
CSR versus CSiR
Justice theories and principles
Integrated frameworks
What Factors Might Reduce the Risk of CSR Backfire Effects?
Honesty is the best policy
The CSR communication conundrum
Information source credibility
Examining and comparing different dimensions of CSR
Cross-cultural and comparative research
Conclusion
References
Part III: ENVIRONMENT, SUSTAINABILITY
Chapter 10: Environmental responsibility: Theoretical Perspective
Introduction
The micro-economics of corporate environmental responsibility
Preempting future regulations
Liability and reputation management
Product differentiation and green consumerism
Operations management
Environmentally responsible investing
Intrinsic motivation
Conclusion
References
Chapter 11: CSR and environmental law: Concepts, Intersections, and Limitations
Introduction
Does CSR Include environmental responsibility?
Understanding CSR and corporate environmentalism
Social License Analysis
Business Economic Perspective
Business Ethics
Understanding environmental law
Development of Environmental Law: Scope, Doctrine, and Philosophy
Scope and doctrine
Philosophy of environmental law
Concept of Sustainability in Environmental Law
Meeting of CSR and environmental law: from command and control and sustainability reporting
Neo-Liberalism, the Regulatory State, and the End of Command and Control
New Regulatory Approaches: Standards and Reporting as Regulation by Information
New Regulatory Norms: Three Environmental Principles
Polluter-pays principle
Principle of prevention
Precautionary principle
Evaluation of CSR and environmental law
Conclusion
References
Chapter 12: Environmental management and strategy
Waste production as a by-product of business activity
Four challenges
Public Attitudes
The Environmental Movement
The Role of Economic Analysis
The Limitations of Scientific and Technical Information
Two issues that illustrate these problems
Solid Wastes
Atmospheric Pollution
What companies can do
Acquiring strategic environmental management capabilities
Public Policies
The Market
Values and Beliefs
Conclusion
References
Chapter 13: On the links betwween corporate environmental and financial performance: Camera or Mirror?
Theoretical underpinnings
The (Natural) Resource-Based View
Industrial Organization Literature
Instrumental Stakeholder Theory
Neoclassical Economics
Theoretical Extensions
Nonlinear relationships
Contingency factors
Different measures of corporate environmental performance
Outcome vs. Process Measures
Absolute vs. Relative Measures
Gate-to-Gate vs. Lifecycle Measures
Other Measures and Study Designs
Accounting disclosures
Perceptions
Third-party ratings
Event studies
Researcher institutional logicala as metatheoretical concerns
Concluding remarks
References
Part IV: ENTREPRENEURSHIP/SOCIAL ENTREPRENEURSHIP
Chapter 14: New roles for business: Responsible Innovators for a sustainable Future
Business as a facilitator of responsible innovation
Challenges and opportunities for responsible innovation in different economic sectors
First Sector: Agriculture and Extractive Industries
Second Sector: Manufacturing and Construction
Third Sector: Service and Banking Industry
Fourth Sector: ICT Industry
Fifth Sector: Sharing Economy
Responsible governance and leadership as catalysts for successful innovation
An agenda for future research
Conclusion
References
Chapter 15: Social entrepreneurship: Prospects for the Study of Market-Based Activity and Social Change
Introduction
Limitations of corporate efforts towards social problems
The Nature of Social Problems
The Nature of Corporate Initiatives
The Drivers of Corporate Initiatives
Social entrepreneurship as an alternative organizing model
Social Problems as a Point of Departure
Social Entrepreneurship as Organizing for Multiple Goals
Social Entrepreneurship and Governance
Social Entrepreneurship across Context
Social entrepreneurship and prospects for corporate initiatives
Social entrepreneurship: research gaps and opportunities
References
Chapter 16: Corporate responsibility and the base of the pyramid proposition
Business strategies for poverty alleviation
The BoP Proposition
Criticisms of the BoP Proposition
What works: empirical findings
Collaborations with Local, Non-Corporate Partners
Co-creation of Strategies and Products with BoP Members
BoP Producers
Microfinance: exploitation or empowerment?
Environmental sustainability and extreme poverty
Conclusion
Acknowledgements
References
Chapter 17: Bringing together the big and the small: Multinational Corporation Approaches to Corporate Social Responsibility and Entrepreneurship in Africa
Overview: corporate social responsibility in africa
CSR entrepreneurship and muktinational corporations
Types of CSR entrepreneurship
Targeted Collaborations and Resources to Scale up Promising Entities
Large-Scale Entrepreneurial Training, Education, and Skills Development Initiatives
Integration of Micro-Entrepreneurs into the Value Chain
Identification, Recognition, and Exchange of Entrepreneurial Ideas
Promotion and Funding of CSRE Tools
Tracking and reporting CSRE impact
Self-Tracking and Reporting
Reporting by Independent Third Parties
Tracking and Reporting through Strategic Partners
Required Tracking and Reporting
Current opportunities and challenges
Conclusion
References
Chapter 18: Entrepreneurship by and for disadvantaged populations: Global Evidence
Introductions
What are disadvantaged populations
Women
Minorities
Immigrants
People with Disabilities
Disadvantaged Economies
Entrepreneurship for disadvantaged populations—social entrepreneurship
Entrepreneurship by disadvantaged populations
Benefits and Barriers
Conclusions and suggestions for future research
References
Part V: STRATEGY AND GOVERNANCE
Chapter 19: Stakeholder management: A Managerial Perspective
Introduction
Basic principles of stakeholder management
Stakeholder management tools
Enterprise Strategy
Identification of Stakeholders
Measuring Value Provided to Stakeholders
The interviews
The Executives and Companies
Initial Reactions to the Paper
Strengths of the Paper
Weaknesses of the Paper
Are Firms Moving in the Direction the Paper Describes?
Is your Firm Measuring Performance More Broadly?
How would you have Written the Article Differently?
A Brief Commentary on the Interviews
Future work on stakeholder management
References
Chapter 20: The consequences of mandatory corporate sustainability reporting
Introduction
Historical background and disclosure regulations
Hypotheses development
Data and sample
Research design
Results
Effects on Corporate Reporting and Value
Conditioning on the Level of Disclosure Before the Disclosure Regulation
Robustness Tests
Alternative matching procedures
Alternative control samples
Governance disclosure as a control variable
Pseudo-events
Auxiliary analysis
Conclusion
Acknowledgments
References
Chapter 21: Profit-with-purpose corporations: An Innovation in Corporate Law to Meet Contemporary CSR Challenges
Introduction
"Profit-with-purpose corporation": what are they?
A specific legal form in the landscape of hybrid organizations
Motivation for the development of PPCs: limits in existing legal frameworks
Socially Responsible Directors are Exposed to a Risk of Legal Action
CSR Commitments are Dependent on Constancy among Shareholders
The Risk of the Unaccountability of Company Directors
The Difficulty to Combine Voluntary Initiatives and Enforceability Mechanisms
PPCs: A Governance model built around a purpose
Purpose as Clarification of the Management Mandate
The Mission-Lock to Stabilize CSR Commitments beyond Changes in Shareholders
A Specific Accountability Procedure for Directors
A Common Purpose Left Open, But Designed to be Enforceable
Discussion: creating the legal conditions of a "Do Good" voluntary engagement
Supporting Responsible Leadership at the Level of Corporate Governance
New Stakes for Scholars and Policy-Makers: Designing the Legal Conditions of CSR
Purpose: The Missing Piece in a CSR-Oriented Theory of the Corporation?
Toward a new research agenda
Empirical Confirmation
Devices, Tools, and Operation
Law and CSR
Conclusion
References
Chapter 22: Redefining the strategy field in the age of sustainability
Introduction
Do we even need a definition for strategy?
What is strategy, really?
Content Analysis
Central Scholars and their Work
A Brief examination of stragegy's main school of thought
A. Economics—the “Original” Definitionof Firm Performance
B. The Positioning School
C. The Resource-Based View
D. The Evolutionary School
E. Population Ecology
F. Resource Dependence Theory
G. Stakeholder Theory
Bringing social, environmental, and ethical issues into strategy
The Textbook World of “Externalities”
The “Separated” World of Corporate Social Responsibility
The Emergence of the Sustainable Organization, and the Need to Redefine Strategy
Theoretical implications, limitations and conclusion
References
Part VI: BUSINESS ETHICS AND RESPONSIBILITY
Chapter 23: A researcher's guide to business and society archival datasets
Introduction
Methodological issues in the use of archival datasets
Measurement Error
Validity
Reliability
Autocorrelation
Databases
Asset4 ESG Data
BoardEx
Bloomberg ESG
Carbon Disclosure Project
The European Pollutant Release and Transfer Register
Global Reporting Initiative
Kinder Lydenburg & Domini (KLD)
RobecoSAM Corporate Sustainability Assessment (CSA)
Sustainalytics, DSR, SiRi, and SiRiPro
Dutch Sustainability Ratings (DSR)
SiRi
Sustainalytics
Sustainalytics Sustainability Global Platform (SGP)
Trucost
Conclusion
References
Chapter 24: How Activists Use Rhetoric to FacilitatePerception Change in Industries
Theoretical background
Methodology
Study One: Activists’ Rhetorical Strategies
Study Two: Activists’ Rhetorical Process
Findings
Study One: Activists’ Rhetorical Strategies
Collective identity contestation
Organizational identity contestation
Institutional contestation
Study Two: RAN’s Process for Enacting the Rhetorical Strategies
Phase 1: Collective identity contestation
Phase 2a: Organizational identity contestation (the Home Depot)
Phase 2b: Institutional contestation (regulation of the Home Depot)
Phase 2c: Organizational identity contestation (the Foolish Five)
Phase 3: Institutional contestation (Norms of the retail home-improvement industry)
Conclusion of the old-growth campaign
Discussion
References
Chapter 25: Institutions and corporate social responsibility
Introduction
The Interaction of institutions and CSR
Types of Institutionalisms
Types of Institutions and Levels of Analysis
Institutions and the Various Domains of CSR
Implications for resaearch at the intersection of institutions and CSR
Impact of Institutions on CSR
CSR and Institutional Change
Conclusion
References
Chapter 26: Social movements and corporate social responsibility: From Contention to Engagement
Introduction
The Sociological context
Notable issues areas
Environment
Anti-Apartheid
Infant Milk Formula and Breast-Milk Substitutes
Sweatshop Labor
Natural Resources in Developing Countries
Stragegies: from contention to engagement
Outsider Strategies
Insider Strategies
Challenges for social movements in CSR
Accountability and Legitimacy
Co-optation
Resources and Efficacy
Future areas of research
Position of Social Movements in the CSR Field
Adaptability of Social Movements in CSR
New Strategies
Conclusion
References
Chapter 27: Corporate social responsibility in emerging markets
Introduction
Historical perspectives on CSR and emerging markets
Historical Roots of CSR
CSR in the Twentieth Century: Social Movements and Corporate Responses
Intergovernmental Agreements and Initiatives
CSR by Developed Country MNEs
CSR by Emerging Market MNEs
Institutional and cultural perspectives
Institutional Theory and CSR by MNEs in Emerging Markets
Filling Institutional Voids and Provision of Public Goods
Emerging Market Multinationals and Legitimacy Signaling
Cultural Differences and CSR
Firm, stakeholder, and network perspectives
Stakeholder Connections and Networks
Firm CSR Resources in Emerging Markets
Collective vs. Individual Initiatives
Future research directions
Institutional and Cultural Perspectives
Firm, Stakeholder, and Network Perspectives
Conclusion
References
Index

Citation preview

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

   

CORPORATE SOCIAL RESPONSIBILITY

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

   

.........................................................................................................................................

CORPORATE SOCIAL RESPONSIBILITY Psychological and Organizational Perspectives ......................................................................................................................................... Edited by

ABAGAIL MCWILLIAMS, DEBORAH E. RUPP , DONALD S. SIEGEL, GÜNTER K. STAHL , and

DAVID A. WALDMAN

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Great Clarendon Street, Oxford,  , United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © Oxford University Press  The moral rights of the authors have been asserted First Edition published in  Impression:  All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by licence or under terms agreed with the appropriate reprographics rights organization. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this work in any other form and you must impose this same condition on any acquirer Published in the United States of America by Oxford University Press  Madison Avenue, New York, NY , United States of America British Library Cataloguing in Publication Data Data available Library of Congress Control Number:  ISBN –––– Printed and bound by CPI Group (UK) Ltd, Croydon,   Links to third party websites are provided by Oxford in good faith and for information only. Oxford disclaims any responsibility for the materials contained in any third party website referenced in this work.

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List of Figures List of Tables List of Contributors

PART I INTRODUCTION . New Developments in the Study of Corporate Social Responsibility



A MW, D E. R, G K. S, D S. S,  D A. W

PART II MICRO/HR ISSUES . The Psychology of CSR



D A. J

. Good Intentions are Not Enough: Applying Best Practices from Humanitarian Aid to Evaluate Corporate Social Responsibility



A G, L F,  S C

. Corporate Social Responsibility and Meaningful Work



A O-D  D E. R

. Diversity and Corporate Social Responsibility: Exploring the Potential Connections between Top Management Team/Board Diversity, CSR, and Workforce Diversity



F J. M

. Responsible Business and Individual Differences: Employee Externally-Directed Citizenship and Green Behaviors



B M. W, D S. O, S D,  R M. K

. Corporate Volunteering: Who Really Wins? K B



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

. Corporate Social Irresponsibility in Spite of Efforts to Act Responsibly: The Nature, Measurement, and Contextual Antecedents of CSR and CSiR by Organizations



M R

. When CSR Backfires: Understanding Stakeholders’ Negative Responses to Corporate Social Responsibility



C R. W

PART III ENVIRONMENT, SUSTAINABILITY . Environmental Responsibility: Theoretical Perspective



L D, T L,  B S

. CSR and Environmental Law: Concepts, Intersections, and Limitations



B S

. Environmental Management and Strategy



A M

. On the Links between Corporate Environmental and Financial Performance: Camera or Mirror?



T B  M O

PART IV ENTREPRENEURSHIP/SOCIAL ENTREPRENEURSHIP . New Roles for Business: Responsible Innovators for a Sustainable Future



C V  A G S

. Social Entrepreneurship: Prospects for the Study of Market-Based Activity and Social Change



J M  N R

. Corporate Responsibility and the Base of the Pyramid Proposition



D G. A  S L. S

. Bringing Together the Big and the Small: Multinational Corporation Approaches to Corporate Social Responsibility and Entrepreneurship in Africa B´  DB-S, L T T,  R E H



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. Entrepreneurship by and for Disadvantaged Populations: Global Evidence

vii



M R  M J. F

PART V STRATEGY AND GOVERNANCE . Stakeholder Management: A Managerial Perspective



J S. H  A C. W

. The Consequences of Mandatory Corporate Sustainability Reporting



I I  G S

. Profit-with-Purpose Corporations: An Innovation in Corporate Law to Meet Contemporary CSR Challenges



K L, B S,  A H

. Redefining the Strategy Field in the Age of Sustainability



I I  O H

PART VI BUSINESS ETHICS AND RESPONSIBILITY . A Researcher’s Guide to Business and Society Archival Datasets



A S, N B, B K. MM,  M P. S

. Mightier than the Sword: How Activists Use Rhetoric to Facilitate Perception Change in Industries



T L. W, C N,  G M

. Institutions and Corporate Social Responsibility



M A. W  C M

. Social Movements and Corporate Social Responsibility: From Contention to Engagement



A L

. Corporate Social Responsibility in Emerging Markets



J D, B W. H,  V M

Index



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L.......................................................   F

.

A CSR Initiative that has Integrated Paris Declaration Principles into its Processes



.

Dimensions of CSR Initiatives



.

The Effects of CSR on the Experience of Meaningful Work



.

Placement of Employee Responsible Behavior Domains within Campbell and Wiernik’s () Consensus Model of Job Performance Dimensions



.

Public Attitudes towards the Environment



.

The Acquisition of SEM Capabilities: The Reciprocal Effects of Public Policies, Markets, and Values and Beliefs Filtered by Psychological and Organizational Processes



.

The Economic Pyramid



.

ESG Disclosure for Treated and Worldwide Control Group



.

ESG Disclosure for Treated and US Control Group



.

Data Structure



.

RAN’s Rhetorical Process for Changing Home Improvement Retailers’ Views of Old-Growth Products



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L  T

.....................................................

.

Why do Stakeholders Respond to CSR? Illustrative Mechanisms that Reflect C-S-R Considerations



.

When do Stakeholders Respond to CSR? Illustrative Moderators of CSR Effects that Reflect C-S-R Considerations



.

Definitions of the Five Principles of the Paris Declaration on Aid Effectiveness



.

The United Nations’ Sustainable Development Goals and their Connection to Managing and Engaging a Diverse Workforce



.

Positive and Negative Consequences of Diversity in the Upper Echelons of an Organization on Team and Organizational Outcomes



.

Likely Positive Consequences of Diversity in the Upper Echelons of an Organization on Corporate Social Responsibility and Firm Performance



.

Facets of Externally-Directed Organizational Citizenship Behavior (OCB-X)



.

Description and Example Behaviors for Each Green Five Content Category



.

Summary of CSiR and Related Terms



.

Studies Reporting Negative Responses to CSR



.

Recent Studies Investigating the CEP–CFP Relationship (Organized by Main Theoretical Underpinning)



.

New Role for Business: Business as Responsible Innovators According to Economic Sectors



.

Future Research Directions on the Role of Business as Responsible Innovators



.

Overview of Select MNCs with CSR Programs that Support Entrepreneurship



.

Examples of Social Entrepreneurship Business Models that Address Disadvantage



.

Propensity-Score Matched Samples



.

The Impact of Mandatory Corporate Sustainability Reporting on ESG Disclosure



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xii

  

.

The Impact of Mandatory Corporate Sustainability Reporting on Assurance and Propensity to Adopt the GRI Reporting Guidelines



.

Instrumental Variables Analysis—the Impact on Tobin’s Q in the Second Stage



.

The Impact of Mandatory Sustainability Reporting on ESG Disclosure, Conditional on Levels of Disclosure in the Year Prior to the Regulation



.

Control Firms from Countries of Same Legal Origin



.

Instrumental Variables Analysis—the Impact on Tobin’s Q in the Second Stage Controlling for Governance Disclosure



.

The Three Characteristic Features of a PPC



.

Main Differences between PPCs and Other Organizational Forms with Social Purposes



.

How the PPC Model Addresses the Main Limits of the Previous Legal Framework



.

Brief History of Sustainalytics



.

Business and Society Datasets



.

Progression from Text Blocks to Aggregate Theoretical Dimensions



.

Overview of Formal and Informal Institutions Used in the CSR Literature



.

Levels of Institutions Used in the CSR Literature



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L  C

...............................................................................

Denis G. Arnold, Jule and Marguerite Surtman Distinguished Professor of Business Ethics, Belk College of Business, University of North Carolina at Charlotte Nicholas Bartkoski, Assistant Professor of Business, Southwestern College Karen Blakeley, Senior Lecturer in Human Resources Management and Head of the Centre for Responsible Management, Winchester Business School, University of Winchester Timo Busch, Chair of Management and Sustainability, University of Hamburg Stuart Carr, Professor of Psychology, Massey University Lammertjan Dam, Associate Professor, Faculty of Economic and Business, Groningen University Benét DeBerry-Spence, Professor and Department Head of Managerial Studies, University of Illinois at Chicago Stephan Dilchert, Associate Professor of Management, Zicklin School of Business, Baruch College, CUNY Jonathan Doh, Rammrath Chair in International Business, founding Faculty Director of the Center for Global Leadership, and Professor of Management at the Villanova School of Business, Villanova University Lori Foster, Professor of Psychology, North Carolina State University Michael J. Freeman, Illinois Institute of Technology Alexander Glosenberg, Assistant Professor of Management and Entrepreneurship, Loyola Marymount University Jeffrey S. Harrison, The W. David Robbins Chair in Strategic Management and Professor of Management, Robins School of Business, University of Richmond Armand Hatchuel, Professor (exceptional class) and Co-Chair of the Chair Theory and Methods of Innovative Design, Mines ParisTech, PSL Research University Olga Hawn, Assistant Professor of Strategy and Entrepreneurship, Sustainability Distinguished Fellow and Faculty Director of the Center for Sustainable Enterprise, Kenan-Flagler Business School, University of North Carolina at Chapel Hill

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xiv

  

Robert Ebo Hinson, Professor and past Head of the Department of Marketing & Entrepreneurship, University of Ghana Business School, University of Ghana Bryan W. Husted, Professor of Social Responsibility and Sustainability, EGADE Business School, Tecnológico de Monterrey Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship, London Business School David A. Jones, Professor of Management and holder of John L. Beckley Professorship, Academic Director of The Sustainable Innovation MBA Program, Grossman School of Business, University of Vermont Rachael M. Klein, I-O Psychology Researcher and Consultant, Korn Ferry Institute Kevin Levillain, Assistant Professor at Center for Management Science, Mines ParisTech, PSL Research University Alwyn Lim, Assistant Professor of Sociology, Singapore Management University Tommy Lundgren, Associate Professor, Umeå School of Business, Economics and Statistics, and Centre for Environmental and Resource Economics, Umeå University Brandi K. McManus, Ph.D. candidate in Management and International Business, University of Oklahoma Abagail McWilliams, Associate Dean and Professor in the College of Business, University of Illinois at Chicago Johanna Mair, Professor for Organization, Strategy and Leadership, Hertie School of Governance and Distinguished Fellow at the Stanford Center on Philanthropy and Civil Society Valentina Marano, Assistant Professor, International Business and Strategy and Associate Fellow, Center for Emerging Markets, D’Amore-McKim School of Business, Northeastern University Alfred Marcus, Professor and Edson Spencer Endowed Chair in Strategy and Technological Leadership, Carlson School of Management, University of Minnesota Gideon D. Markman, Professor of Strategy, Entrepreneurship & Sustainable Enterprise, College of Business, Colorado State University and Gent University Frances J. Milliken, Professor of Management, NYU Stern School of Business, New York University Christof Miska, post-doctoral research and teaching associate, Institute for International Business, WU Vienna University of Economics and Business Chad Navis, Arthur M. Spiro Professor of Entrepreneurial Leadership, College of Business, Clemson University

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  

xv

Deniz S. Ones, Professor of Psychology, University of Minnesota-Twin Cities Akwasi Opoku-Dakwa, Assistant Professor of Management, Palumbo Donahue School of Business, Duquesne University Marc Orlitzky, Chair in Management, UniSA Business School, University of South Australia Nikolas Rathert, postdoctoral research fellow, Hertie School of Governance Maija Renko, Associate Professor, Department of Managerial Studies, University of Illinois at Chicago Maria Rotundo, Professor of Organization Behaviour and Human Resource Management, Rotman School of Management, University of Toronto Deborah E. Rupp, Professor of Psychology, George Mason University Bert Scholtens, Professor, Faculty of Economics and Business, Groningen University and Professor of Banking and Finance, University of Saint Andrews Blanche Segrestin, Professor in Management Sciences, Mines ParisTech, PSL Research University George Serafeim, Professor of Business Administration, Harvard Business School Andreas Georg Scherer, Chair of Foundations of Business Administration and Theories of the Firm, University of Zurich Ali Shahzad, Associate Professor of Management, James Madison University Mark P. Sharfman, Director of the Division of Management & International Business, Puterbaugh Chair in American Enterprise and Professor Strategic Management, Price School of Business, University of Oklahoma Benedict Sheehy, Associate Professor, School of Law and Justice, University of Canberra Donald S. Siegel, Foundation Professor of Public Policy and Management and Director, School of Public Affairs, Arizona State University Sabrina L. Speights, Assistant Professor of Business and Management, Wheaton College Massachusetts Günter K. Stahl, Professor of International Management, Vienna University of Economics and Business Lez Trujillo Torres, Assistant Professor, ESSEC Business School Christian Voegtlin, Associate Professor, Audencia Business School David A. Waldman, Professor of Management, W. P. Carey School of Business, Arizona State University

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  

Theodore L. Waldron, Associate Professor of Management, Rawls College of Business, Texas Tech University Andrew C. Wicks, Ruffin Professor of Business Administration, Darden School of Business, University of Virginia Brenton M. Wiernik, Assistant Professor of Industrial–Organizational Psychology, University of South Florida Chelsea R. Willness, Associate Dean, Associate Professor and Grandey Scholar in Sustainable Leadership, Edwards School of Business, University of Saskatchewan Michael A. Witt, Affiliate Professor of Strategy and International Business, INSEAD

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  ......................................................................................................................

INTRODUCTION ......................................................................................................................

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  ......................................................................................................................

         ......................................................................................................................

  ,  . , ¨  . ,  . ,   . 

I the  Handbook of CSR (Crane, McWilliams, Matten, Moon, and Siegel) we noted the lack of a standard, accepted definition of CSR. Now a decade later we find ourselves with the same challenge. Some of the chapters in this new volume offer definitions, including those by Jones; Dam, Lundgren, and Scholtens; Voegtlin and Scherer; Renko and Freeman; Lim; and Doh, Husted, and Marano. Their definitions vary somewhat, but the basic theme is that increasingly corporations recognize responsibilities to society and engage in activities that contribute to social good, beyond what is required by law or profit maximization. These activities fall into two general categories: () strategic, such as stakeholder management, and () altruistic, such as environmental overcompliance. Targeted definitions allow researchers to focus on an area of study such as the environment or stakeholders or on processes such as operations or strategy, while broad definitions allow interdisciplinary discourse on the motivations and ramifications of CSR. Lockett et al. () proposed that CSR is a field of study within the management discipline. This, however, is clearly too limiting, since CSR has long been of interest and debate across multiple disciplines, as well as being of practical importance to business and society. Attention to CSR continues to grow, as evidenced by the increasing number of articles, special issues of leading academic journals, books, and major academic and practitioner conferences devoted to this topic (Morgeson et al., ). Concomitant trends are illustrated by the increase in graduate training in CSR issues

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

, , , ,  

across a variety of academic fields, and leadership development and volunteerism programs designed to promote employee citizenship and responsible behaviors in corporations (Caligiuri et al., ; Pless et al., a). This has resulted in more engaged scholars in fields outside of management, such as accounting, economics, finance, marketing, operations management, political science, psychology, and sociology, conducting CSR-related research, resulting in vast social networks of academicians with related interests. In the management field there are currently thousands of scholars conducting CSR-related research. As of  the Social Issues in Management (SIM) Division of the Academy of Management (AOM) has some , members. The Organizations and the Natural Environment (ONE) Interest Group, which devotes a considerable amount of attention to environmental social responsibility, has more than  members. There has also been a substantial rise in interest in CSR among scholars in entrepreneurship, organizational behavior, and human resource management and strategy. The growing importance of CSR research is also evidenced by growth in the number of specialized journals (e.g. Business and Society, Business Strategy and the Environment, Corporate Social Responsibility and Environmental Management, Organization and Environment, Social Responsibility Journal, Society and Natural Resources, and Sustainability Science) and their rising impact factors. This Handbook reflects this growth. Oxford University Press published The Oxford Handbook of Corporate Social Responsibility edited by Crane, McWilliams, Matten, Moon, and Siegel in . This is a comprehensive collection of work representing the state of the field at the time. While the  Handbook continues to be an authoritative collection of research on the topics included, research in CSR has continued to develop. Important new directions include more micro-based research in social responsibility in organizational behavior and human resource management; additional studies of environmental social responsibility and sustainability; more research on strategic CSR; connections between social responsibility and entrepreneurship (e.g. social entrepreneurship); and improvements in methods and data analysis as the field matures. The amassing research in these new areas has created a need for this second Handbook, with a broader scope and current perspectives. A goal of this volume is to generate awareness and understanding of the good that can come from business and its ability to inspire social action.

T B P

.................................................................................................................................. The  Handbook includes six substantive sections: perspectives on CSR; critiques of CSR; actors and drivers of CSR; managing CSR; CSR in a global context; and future perspectives. While it continues to be an authoritative collection of research on the topics included, the collection of writings assumed the firm as the main unit of analysis, considered CSR to be something that firms did, and discussed CSR in a somewhat omnibus or broad way. Distinct CSR practices were rarely considered and CSR was presented as the

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      



broad set of practices taken on by a firm to create social good (El Akremi et al., ). As such, these chapters most often took the perspective of the firm, largely considering the benefits to firms for engaging in CSR to varying degrees and in varying ways. The current Handbook not only expands this treatment and perspective, it showcases work that is more multidisciplinary in nature, it takes on a wider variety of research methodologies, and it treats CSR as a more nuanced construct. The current volume is comprised of five substantive sections: () Micro/HR issues; () Environment and Sustainability; () Entrepreneurship/Social Entrepreneurship; () Strategy and Governance; and () Business Ethics and Responsibility. This allows our exploration to begin at the most micro level of analysis—that of individual perceptions, attitudes, and behaviors—move to the firm level of analysis, and ultimately to expand out from there by considering institutions, social movements, and emerging markets. Doing so allows us to showcase a wide variety of methodologies, including experimental research carried out in both lab and field, survey research, qualitative research, longitudinal research, and so forth. In the remainder of this chapter, we provide an introduction to each of the five sections, followed by focused summaries of the chapters contained in the Handbook.

M CSR  H R M

.................................................................................................................................. The Handbook begins with chapters on individual-level perspectives of CSR, starting with a comprehensive review chapter by Jones on the psychology of CSR. While recognizing marketing research that has considered consumer perspectives on CSR, this chapter largely focuses on organizational members (and potential organizational members), reviewing research that is both person-centric and psychologically grounded. In doing so, we come to better understand “the psychological processes involved in individual stakeholders’ evaluations of, and responses to, and organization’s CSR practices” (p. ). This includes applicant, employee, and consumer CSR awareness, CSR perceptions, and reactions to both. It also includes the personality, relational, and contextual characteristics that facilitate, attenuate, and inhibit both positive and negative reactions to CSR. Importantly, this chapter categorizes individual-level antecedents and consequences of perceived CSR in terms of care-based, self-protective, and relational considerations. Doing so adds much needed order to a dizzying array of theoretical perspectives taken, and variables modeled, within this domain. Importantly, and setting the scene for the rest of the Handbook, readers come away with an understanding of the large amount of “micro-CSR” research that has been published, the complexity by which CSR perceptions are formed and reacted to by the individuals comprising multiple stakeholder groups, and the necessity for an integrated theoretical and interdisciplinary perspective in studying CSR phenomena.

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

, , , ,  

Glosenberg, Foster, and Carr take this treatment one step further by considering the psychological and behavioral impact of CSR initiatives on another stakeholder group sparsely focused upon in the extant research—the intended beneficiaries of CSR (Margolis and Walsh, ). Focusing on the ability of firms, through their CSR efforts, to impact human progress and welfare, they draw on research and practice within the areas of both humanitarian aid/economic development (OECD, ) and program evaluation more generally (Shadish et al., ) to assess the extent to which CSR goals are met and to better create an ongoing cycle of financial, social, and environmental performance. The authors adopt the principles of the Paris Declaration of Aid Effectiveness (managing for results, ownership, alignment, harmonization, and mutual accountability) and reposition them as a model for CSR program design and evaluation by firms. This approach provides a model that not only allows firms to evaluate their initiatives from a multi-stakeholder perspective, but frames CSR initiatives which have many important impacts on individual human welfare—again highlighting the importance of a psychological perspective. The chapter by Opoku-Dakwa and Rupp highlights the positive and negative impacts of CSR alluded to by Glosenberg et al. More specifically, Opoku-Dakwa and Rupp review and integrate research relating to meaningful work and CSR in presenting a theoretical model that proposes how CSR initiatives in place in organizations create meaning for employees (with the experience of meaningfulness having been shown in the organizational behavior literature to be highly predictive of a number of positive employee- and organization-relevant outcomes). The model outlines how CSR initiatives vary according to what employees expect them to achieve, their assessment of the extent to which these expectations are met, the attributions regarding the character of the firm and its members, and opportunities for involvement. These micro facets of CSR are proposed to influence perceptions of the service value, kinship value, and intrinsic value of one’s work, which impact work meaningfulness. In this way, CSR provides a unique opportunity to positively influence human resources, as well as a strategic HR tool, if and only if certain initiative design characteristics, and well as person and context characteristics, are in place. The Milliken chapter makes the case for how CSR can be linked to diversity. The main focus of this chapter is on how and why the presence of diversity on a top management team or board of directors might affect actions that an organization is likely to take with respect to goals and initiatives pertaining to CSR. She explores how an organization’s CSR-related actions, in turn, might influence the likelihood of attracting and retaining a diverse workforce, especially on visible variables such as race and gender. Wiernik, Ones, Dilchert, and Klein focus on two domains of employee responsible behavior: () externally directed citizenship behaviors (OCB-X), and () employee green behaviors. They define OCB-X as interpersonal employee behaviors that directly benefit persons outside the organization. Such behaviors are conceptually similar to the individually directed, organizational citizenship. However, OCB-X behaviors are directed at persons outside of an organization, rather than at co-workers or other persons

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      



inside the organization. Employee green behaviors are “scalable actions and behaviors that employees engage in that are linked with and contribute to or detract from environmental sustainability” (p. ). Together, Wiernik et al. consider OCB-X and employee green behaviors in the context of CSR practices and policies. The Blakeley chapter focuses specifically on corporate volunteerism, which represents an important and popular subcategory of what Wiernik et al. would refer to as OCB-X. She defines volunteerism as employees volunteering for a charitable organization, non-profit group, or social purpose, who are supported by policies, programs, or initiatives provided by their employer. Her chapter presents a clearer and more balanced understanding of both the benefits and limitations of volunteerism. Blakeley surveys research that has investigated the potential outcomes of such programs at the organizational level, with a particular focus on staff recruitment and retention, organizational commitment, leadership development, organizational performance, and stakeholder reputation. Blakeley points out that, although research consistently suggests recruitment advantages for companies strongly committed to volunteerism, little is known about the theoretical processes underlying the phenomenon. The chapter by Willness highlights what can go wrong when CSR initiatives are not designed and monitored in the ways suggested in the previous chapters. Importantly, this chapter highlights how CSR is not a panacea—that CSR initiatives can vary significantly in their focus, design, and implementation, and as such, CSR has the potential to “backfire” with negative consequences for multiple stakeholders. Again taking a psychological approach, Willness considers when and why individuals might respond negatively to CSR, and the contexts within which this can occur. Consistent with the micro theme of this section of the Handbook, this chapter considers perceptions, responses, and reactions to CSR—which ultimately connect to the effectiveness of CSR initiatives in meeting stakeholder needs. Willness explores the conditions under which CSR backfires among consumer, employees, and job seekers, and identifies specific aspects of this process, including CSR cynicism and skepticism toward CSR claims. She also makes recommendations for reducing the negative potential within CSR initiatives, including honesty, source credibility, and strategic communication. Rotundo takes this “dark side” notion one step further by reviewing research on corporate social irresponsibility (CSiR). Starting with the premise that CSiR occurs despite organizational efforts to engage in CSR, the chapter traces how thinking around irresponsibility has evolved over the decades. It then turns to the measurement of irresponsibility and what has been demonstrated empirically in terms of its antecedents and consequences. Situational antecedents of CSiR are discussed, including time pressure, incentive systems, organizational climates, organizational culture, leadership, governance, regulation, and CSR itself. In sum, a common theme of these chapters is that, although there is substantial empirical evidence that is relevant to the micro foundations of CSR, more theoretical work needs to be done. There are some good beginnings that are included in the chapters in this section of the book. For example, the Jones chapter mentions signaling theory as a means of investigating why potential recruits for an organization would be

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

, , , ,  

attracted by the organization’s commitment to community engagement (e.g. corporate volunteerism) and environmental protection. Further, Opoku-Dakwa and Rupp present a framework for understanding the effects of CSR on the experience of meaningful work. Despite such beginnings, we contend that more theory is necessary to better understand how micro-level phenomena pertain to CSR. Moreover, we recognize that the area of leadership behavior is largely missing from considerations regarding micro foundations. However, there is work in the literature dealing with what has become known as responsible leadership (Pless et al., b; Stahl & Sully de Luque, ; Waldman & Balven, ; Waldman, ). In the future, we certainly expect to see more work linking the topic of leadership to CSR. For example, are there patterns of leadership behavior that affect a firm’s image (either positively or negatively) pertaining to its implementation of CSR? Obviously, the answer to such a question is highly relevant to both the positive aspects and the potential downsides of CSR that are considered in this section of our book.

CSR, E,  S

.................................................................................................................................. The  Handbook (Crane et al.) did not include a section on environmental responsibility and sustainability. The research on these topics has exploded in the time since the first Handbook, to the point where (environmental) sustainability is often used as a synonym for CSR. The following chapters introduce terms such as corporate environmental responsibility (CER), corporate environmental performance (CEP), corporate financial performance (CFP), and strategic environmental management (SEM), and provide theory and evidence on each and on the relation between them. Dam, Lundgren, and Scholtens review some of the literature on corporate environmental responsibility. To guide the reader, they offer a taxonomy of the relevant literature, including () the micro-economics of corporate environmental responsibility, () preempting future regulations, () liability and reputation management, () product differentiation and green consumerism, () operations management, () environmentally responsible investing, and () intrinsic motivation. They review relevant theory development and empirical evidence in each category through a micro-economics lens, focusing on the behavior of individual agents in firms and households and the trade-offs that are faced in balancing production/consumption with environmental responsibility. They conclude that better measurement and reporting (particularly regarding actual environmental performance) at both the firm level and national level are necessary to advance theory in CSR-CER. Sheehy presents an overview of environmental law and explains how it both parallels and differs from environmental CSR. The development of environmental responsibility and environmental law followed a similar origin and growth. They both originated from a widespread recognition that human production and consumption uses and often misuses natural resources that may not be renewable. They grew as a result of

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      



environmental disasters such as Love Canal, Bhopal, and the Exxon Valdez oil spill. A primary difference is that CSR assumes that there are market or personal drivers that motivate responsible behavior, while law is predicated on the assumptions that decision-makers recognize a broad social good and respond to the threat of force. Early environmental law was command and control, that is, it mandated not only performance standards (such as allowable emissions), but also the means to achieve the performance (such as smoke stack scrubbers). The global growth of environmental CSR resulted in the development of reporting standards such as the Global Reporting Initiative (GRI) which are widely followed. As reporting increased, regulations became less command and control oriented. However, Sheehy concludes that it remains unclear—and seems unlikely—that sustainability can be achieved through reporting alone, therefore providing support for the continued involvement of government in protecting the environment. Marcus’s chapter is an in-depth analysis of environmental management, in context of generating products and services to customers. Marcus, a well-known strategy scholar, refers to this as “strategic environmental management” (henceforth, SEM). He identifies four challenges to effectiveness in SEM: () public attitudes; () environmental movement pressures; () the limitations of economic analysis; and () the shortcomings of scientific and technical information. Marcus examines the examples of solid waste and atmospheric pollution and how some firms have been able to improve their SEM. More specifically, he illustrates how these firms have developed resources and capabilities that have enabled them to establish a competitive advantage in this arena. Finally, Marcus makes the point that environmental management is an important aspect of what has become known as “strategic” CSR. A key issue in the burgeoning literature on CSR is the relationship between corporate environmental performance (CEP) and corporate financial performance (CFP). Busch and Orlitzky review recent empirical studies of this relationship, i.e. articles appearing in top academic journals on this topic since the publication of the Oxford Handbook of CSR in ). It appears that most recent studies report a positive link between CEP and CFP. Since that question seems to be resolved, researchers are shifting away from the question of whether it “pays to be green” to a more practical (both theoretically and empirically) question: “When does it pay to be green?” (Dixon-Fowler et al., ; Guenther et al., ). The authors also describe the potential confounding impact of institutional logics among social scientists studying the CEP–CFP link. That is, while individual studies seem to report objective results, in the sense that they analyze the CEP–CFP relation from an unbiased perspective, their findings may reflect their own self-perceptions and legitimization efforts. This is an important finding, since it means that we should be careful in interpreting the mass of empirical findings, especially when they appear to support the existence of a positive CEP–CFP connection. Thus, the quality of data and analytic methods employed by such authors should be very carefully scrutinized (as we shall see in our discussion of the chapter by Shahzad, Bartkoski, McManus, and Sharfman).

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

, , , ,  

E/S E

.................................................................................................................................. A section on entrepreneurship was not included in the  Handbook (Crane et al.); its inclusion in this new volume acknowledges the role of entrepreneurship in creating social good as well as the role of corporations in supporting innovation and entrepreneurship as forms of CSR. The chapter by Voegtlin and Scherer focuses on the emerging concept of “responsible innovation.” Their point of departure is that the grand societal challenges of our time, such as the ones outlined in the UN Sustainable Development Goals, represent complex sustainability challenges that require concerted efforts by various actors— including private-sector companies—to be successfully addressed. Responsible innovation, defined as “a transparent, interactive process by which societal actors and innovators become mutually responsive to each other with a view on the (ethical) acceptability, sustainability and societal desirability of the innovation process and its marketable products” (von Schomberg, , ), is a framework that evaluates innovations with regard to their potential harmful consequences on the one hand, and their potential positive contribution to societal challenges on the other hand. The chapter highlights particular challenges and opportunities across the spectrum of economic sectors and addresses firm-specific capabilities for corporate governance and responsible leadership that are conducive to responsible innovation. Mair and Rathert begin with a critical assessment of corporate activities and initiatives addressing social problems, pointing out that, despite potentially good intentions, corporations often fail to create social impact as they lose sight of the tasks involved in addressing societal grand challenges, adopt largely ineffective initiatives, and revert back to “business as usual” when faced with tensions between social and economic goals (McWilliams et al., ). They introduce social entrepreneurship— “the innovative use and combination of resources to pursue opportunities to catalyze social change and/or address social needs” (Mair and Martí, , )—as an alternative organizing model that harnesses market-based activities to overcome social problems and drive social change. Key elements of this model include a focus on understanding the causal architecture and institutional embeddedness of social problems, the pursuit of multiple interrelated goals to effect social change, creative governance arrangements, and the contingencies of social entrepreneurship across contexts. Mair and Rathert discuss these elements in light of the motives and challenges of CSR initiatives, in particular how social goals are often subjugated to a financial logic, in order to generate a constructive debate on learning potential for the corporate sector from social entrepreneurship. The base of the pyramid (BoP) proposition holds that corporations can reap vast profits by providing goods and services to the billions of people who live in poverty across the globe while simultaneously improving the lives of the impoverished.

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      



Although BoP scholarship is in a comparatively early stage of development, theoretical progress regarding the BoP proposition has been made in recent years, and initial research has provided evidence regarding what strategies, ventures, and practices succeed in profitably serving BoP markets. Arnold and Speights provide a historical overview of the original BoP proposition, summarize criticisms the proposition has received, describe empirical research on BoP initiatives, and detail examples of successful ventures. The chapter gives particular attention to the ways in which people living at the BoP can act as producers and co-creators (not solely as consumers), the role of microfinance initiatives, and the importance of taking into account environmental considerations in BoP populations. Ultimately, this chapter situates the BoP proposition in theories of CSR and ethics to differentiate between exploitative and empowering BoP ventures and to highlight the broader imperative to consider both the economic and the ethical dimensions of successful BoP ventures. Africa has received little attention in the CSR literature. DeBerry-Spence, Torres, and Hinson address this gap in the literature with their chapter on Corporate Social Responsibility and Entrepreneurship (CSRE). They explain that, because of the state of development in much of Africa, there is great need for support of indigenous entrepreneurs. This opens the door for multinational corporations to focus their social responsibility on helping local entrepreneurs. DeBerry-Spence et al. highlight several types of support provided, including targeted resources to scale up promising entities, large-scale entrepreneurial education and skills development programs, integration of microentrepreneurs into the corporation’s value chain, and the identification, recognition, and exchange of entrepreneurial ideas. Descriptions of a number of large, multinational corporations sponsoring and supporting local entrepreneurs in Africa are presented. The chapter ends with a discussion of current opportunities and challenges. In their chapter Renko and Freeman examine a developing research area in the intersection of CSR and entrepreneurship, by looking at entrepreneurship both “by” and “for” disadvantaged populations. When it comes to enacting CSR, entrepreneurs have an advantage in that they can make socially responsible practices a core part of the venture’s mission and values (Certo and Miller, ). These new firms can be specifically built to benefit one of the many disadvantaged populations in the world, e.g. women, minorities, immigrants, the disabled and people living in disadvantaged economies. There are a variety of business models that entrepreneurs can use to enact CSR. The most obvious is a philanthropic model, where profits are sent to charity. But disadvantaged populations can also benefit from firms that provide or ensure their access to markets, that provide access to products or services that purely-for-profit firms are not willing to provide, or that directly employ them. That last model, which involves directly employing the disadvantaged, points to another way that entrepreneurship can benefit the disadvantaged—they can engage in it themselves. Such entrepreneurship by the disadvantaged has traditionally been excluded as mere self-employment, but as researchers call for a more inclusive view of entrepreneurship (Welter et al., ), the authors support its inclusion. Thus the study of CSR within entrepreneurship ends up showing that there may be a need to

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

, , , ,  

redefine entrepreneurship itself; much as its study has previously called into question the issues of agency and economic justification (cf. Friedman, ; McWilliams and Siegel, ) in strategic management.

S  G

.................................................................................................................................. Strategy and governance is another new section, not included in the  Handbook (Crane et al.). Strategic managers are responsible for the “big” decisions in organizations, therefore an examination of their motives and actions relative to CSR is warranted in this volume. The chapters in this section include a comprehensive examination of stakeholder management; an evaluation of transparency and disclosure; an assessment of the need for legal protection for CSR strategies in publicly held firms and finally, a reconceptualization of strategy to include sustainable global development. One of the most important theoretical concepts in the study of CSR is stakeholder theory (Freeman et al., ). In fact, for a number of years many academicians and practitioners equated stakeholder theory with corporate social responsibility. The chapter by Harrison and Wicks is a state-of-the-art analysis of a more practical side of stakeholder theory, i.e. what has become known as “stakeholder management.” They begin by providing a parsimonious foundation for stakeholder management, which focuses on stakeholder management in practice. The authors also present extensive qualitative evidence from corporate executives who are engaged in stakeholder management, including how these managers assess the value they provide to stakeholders. They conclude with some important suggestions for how to advance the practice of stakeholder management in the future. As noted in Siegel and Vitaliano (), information asymmetry is a key aspect of strategic CSR. Ioannou and Serafeim examine the measurement and disclosure of important metrics and information relating to sustainability. Specifically, the authors analyze the implications of regulations mandating the disclosure of environmental, social, and governance (ESG) information in China, Denmark, Malaysia, and South Africa, based on a rich firm-level dataset from these countries. Using sophisticated econometric methods, i.e. differences-in-differences estimation with propensity score matched samples, the authors conclude that regulations induce the appropriate behavior. More specifically, they find an increased likelihood of firms voluntarily receiving assurance to enhance disclosure credibility and an increased likelihood of firms voluntarily adopting reporting guidelines that enhance disclosure comparability. These results suggest that, even in the absence of a regulation that mandates the adoption of assurance or specific guidelines, firms seek the qualitative properties of comparability and credibility. In sum, their evidence implies that current efforts to increase transparency regarding the impact of corporations on society are effective at improving disclosure quantity and quality, as well as firm value. As discussed in the Entrepreneurship/Social Entrepreneurship section of this Handbook, companies are increasingly expected to provide innovative solutions to social and

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      



environmental challenges as part of their business activities. But do they have the leeway and legal protection to do so? Levillain, Segrestin, and Hatchuel, in their chapter on “profit-with-purpose” corporations, show that the legal conditions to protect CSR initiatives are not always met. By defining social or environmental purposes in their charters, profit-with-purpose corporations such as Benefit Corporations, or B Corps, operate with a legal structure that allows a balanced pursuit of purpose and profits. The chapter reviews these new legal forms that have appeared in several countries, analyzes the underlying motivations and drivers, and proposes a general model of profit-withpurpose corporations. Levillain, Segrestin, and Hatchuel make a strong case that alternative legal frameworks and forms of governance are needed to protect the ability of top executives to engage in CSR initiatives which are not primarily driven by a profit-maximization perspective. In their provocative chapter, Ioannou and Hawn take the concept of “strategic” environmental CSR (Siegel, ) quite seriously. The authors seek to redefine the field of strategy in the age of sustainability. In doing so, they fundamentally challenge the way we have traditionally viewed the role of the corporation in society. They begin by analyzing how strategy is defined in the literature. The authors report that most conceptualizations focus on financial indicators (e.g. share price, accounting profitability) as measures of performance and only provide guidance on the strategic management of a firm’s economic context. They go on to review the CSR literature and papers that deal with environmental externalities and find that environmental and social performance is typically analyzed either in isolation, or by assuming a strong form of independence from financial performance. Thus, Ioannou and Hawn are able to identify a clear gap in the strategy field, with respect to our understanding of the fundamental strategic problem in the age of sustainability. The authors provide an extended definition (i.e. a reconceptualization) of the strategy field, thus expanding its boundaries. They conclude by considering the implications of this reconceptualization for research and practice. They close with a plea to direct strategic management research and practice towards solving some of the world’s biggest challenges, which could help lead us on a path towards sustainable global development.

B E  R

.................................................................................................................................. Because business ethics is another term that often substitutes for CSR (although they are not truly synonymous), a section on business ethics and responsibility is an important addition to this Handbook. This section includes a guide to using archival databases, a qualitative study of how activists change managerial perceptions of CSR, an examination of how of social movements affect CSR, and a review of CSR in emerging markets. The burgeoning literature on CSR is largely empirical. However, there has been no systematic guide to the numerous datasets used to analyze the antecedents and

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

, , , ,  

consequences of CSR activities. There has also been no systematic consideration of key measurement issues, in the context of CSR. The chapter by Shahzad, Bartkoski, McManus, and Sharfman fills these gaps, while noting that constructs such as “social performance” are extremely difficult to measure. The authors begin by analyzing key methodological issues that arise when using archival databases, including measurement error, validity, reliability, and autocorrelation. They go on to list, describe, critique, and review the most widely used databases for CSR research. For each of these datasets, the authors list the major studies using the file, key methodological research based on the dataset, and also provide a brief description of the dataset’s strengths and weaknesses. Anyone contemplating conducting empirical research on CSR will find this chapter extremely helpful. In their chapter, Waldron, Navis, and Markman conduct an extensive qualitative analysis of how activists influence managers’ perceptions of their firms’ practices, based on an investigation of their rhetorical process and composite strategies. The authors make three contributions to the burgeoning stream of research on social activism. First, they document the importance of managerial perceptions of activists’ campaigns in industries. It appears that activist organizations use distinct rhetorical strategies to affect these perceptions. Secondly, they specify the instruments through which activists facilitate change in managerial perceptions. Finally, the authors introduce a novel methodology for studying social activism in industries. Instead of relying on pure theory or quantitative approaches to explore how activists pressure firms to engage in practice change, the authors adopt a novel two-study qualitative approach to explore how activists persuade firms’ managers to assign different meaning to their practices. The chapter by Witt and Miska provides a comprehensive overview of how existing research has approached the linkage between CSR and institutions. In particular, the authors lay out how the three major approaches to institutions or forms of institutionalism (sociological, historical, and rational choice institutionalism) have approached CSR, what kinds of institutions and levels of analysis have been used, and how this has been linked to various domains of CSR. Based on this overview, they derive implications for research and directions how work at the intersection of CSR and institutions might advance. Specifically, Witt and Miska make a point that the field should stop viewing institutional conformity with legal (formal) and social (informal) norms as CSR and instead apply insights from comparative institutional analysis to voluntary (explicit) forms of CSR, leverage configurational methods, and explore the co-evolution of CSR and institutional norms. In recent years, there has been considerable attention in the academic literature to the impact of social movements on CSR (King, ). In his chapter, Lim defines a social movement as “any kind of organized activity originating from the civil sphere that seeks to influence social and political change, including what are conventionally referred to as social movement organizations, civil society, and nongovernmental organizations.” Lim begins with an extensive examination of the theoretical origins of the analysis of social movement impact on CSR. He goes on to assess the different strategies that social movements have used to influence businesses, as well as their

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      



concrete impact on CSR practices. He goes on to consider the domestic and global implications of social movement activity in the realm of CSR, as well as future implications for research on the impact of social movements on CSR. The Handbook concludes with a chapter by Doh, Husted, and Marano that explores the rise and proliferation of CSR in emerging markets. The authors begin by tracing the history of CSR in emerging markets, a process that grew, in part, from criticisms of multinational enterprises (MNEs) in the global economy. They then turn their attention to the principal macro and meso level conceptual and theoretical lenses that have been used to inform the study of CSR in emerging markets, namely, institutional theory and cross-cultural perspectives. Finally, they review firm, network, and stakeholder perspectives that have guided the study of CSR in emerging markets. Doh, Husted, and Marano consider the literature and practical accounts that have explored CSR by developed country MNEs in emerging markets, as well as the emerging literature on CSR by emerging market firms and MNEs. They conclude with an overall assessment of current understandings of CSR in emerging markets and make recommendations for future research. In summary, in the new Handbook, we introduce new perspectives, new methodologies, and new evidence from a range of disciplines to encourage and facilitate interdisciplinary research and global implementation of corporate social responsibility. Each of the chapters has something new to offer and taken together they expand our understanding of the motivations and realizations of CSR.

R Caligiuri, P., Mencin, A., and Kaifeng, J. . Win-win-win: The influence of companysponsored volunteerism programs on employees, NGOs and business units. Personnel Psychology, (), –. Certo, S. T., and Miller, T. . Social entrepreneurship: Key issues and concepts. Business Horizons, (), –. Crane, A., McWilliams, A., Matten, D., Moon, J., and Siegel, D. S. . The Oxford Handbook of Corporate Social Responsibility. Oxford: Oxford University Press. Dixon-Fowler, H. R., Slater, D. J., Johnson, J. L., Ellstrand, A. E., and Romi, A. M. . Beyond “does it pay to be green?”: A meta-analysis of moderators of the CEP–CFP relationship. Journal of Business Ethics, , –. El Akremi, A., Gond, J.-P., Swaen, V., De Roeck, K., and Igalens, J. . How do employees perceive corporate responsibility? Development and validation of a multidimensional corporate responsibility scale. Journal of Management, , –. Freeman, R. E, Harrison, J. S., Wicks, A. C., Parmar, B., and de Colle, S. . Stakeholder Theory: The State of the Art. Cambridge: Cambridge University Press. Friedman, M. . The social responsibility of business is to increase its profits. New York Times Magazine, Sept. . Guenther, E., Busch, T., Endrikat, J., Guenther, T. and Orlitzky, M. . What we know about the economic payoffs of corporate ecological sustainability. In J. Weber and D. Wasieleski (eds), Corporate Social Responsibility, –. Bingley, Yorks: Emerald.

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

, , , ,  

King, B. G. . A political mediation model of corporate response to social movement activism. Administrative Science Quarterly, (), –. Lockett, A., Moon, J., and Visser, W. . Corporate social responsibility in management research: Focus, nature, salience and sources of influence. Journal of Management Studies, (), –. McWilliams, A., and Siegel, D. S. . Corporate social responsibility: A theory of the firm perspective. Academy of Management Review, (), –. McWilliams, A., Shrader, R. S., and Van Fleet, D. D., . Rethinking the base of the pyramid: Social responsibility, sustainability and the role of entrepreneurs. In A. Guerber, G. Markman, and S. Su (eds), The World Scientific Reference on Entrepreneurship, iii. Sustainability, Ethics and Entrepreneurship, –. Singapore: World Scientific Publishing. Mair, J., and Marti, I. . Social entrepreneurship research: A source of explanation, prediction and delight. Journal of World Business, (), –. Margolis, J. D., and Walsh, J. P. . Misery loves companies: Rethinking social initiatives by business. Administrative Science Quarterly, (), –. Morgeson, F. P., Aguinis, H., Waldman, D. A., and Siegel, D. S. . Extending corporate social responsibility research to the human resource management and organizational behavior domains: A look to the future. Personnel Psychology, , –. Organization for Economic Co-operation and Development. . Harmonisation, Alignment, Results: Report on Progress, Challenges, and Opportunities. Paris: OECD. . Pless, N. M., Maak, T., and Stahl, G. K. a. Promoting corporate social responsibility and sustainable development through management development. Human Resource Management, (), –. Pless, N. M., Maak, T. and Waldman, D. A. b. Different approaches toward doing the right thing: Mapping the responsibility orientations of leaders. Academy of Management Perspectives, (), –. Shadish, W. R., Cook, T. D., and Leviton, L. C. . Foundations of Program Evaluation: Theories of Practice. London: Sage. Siegel, D. S. . Green management matters only if it yields more green: An economic/ strategic perspective. Academy of Management Perspectives, (), –. Siegel. D. S., and Vitaliano, D. . An empirical analysis of the strategic use of corporate social responsibility. Journal of Economics and Management Strategy, (), –. Stahl, G., and Sully de Luque, M. . Antecedents of responsible leader behavior: A research synthesis, conceptual framework, and agenda for future research. Academy of Management Perspectives, (), –. Von Schomberg, R. . Prospects for technology assessment in a framework of responsible research and innovation. Technikfolgen abschatzen lehren: Bildungspotenziale transdisziplinarer methode, –. Waldman, D. A. . Bridging the domains of leadership and corporate social responsibility. In D. Day (ed.), Handbook of Leadership and Organizations, –. New York: Oxford University Press. Waldman, D. A., and Balven, R. . Responsible leadership: Theoretical issues and research directions. Academy of Management Perspectives, , –. Welter, F., Baker, T., Audretsch, D., and Gartner, W. . Everyday entrepreneurship: A call for entrepreneurship research to embrace entrepreneurial diversity. Entrepreneurship Theory and Practice, (), –.

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  ......................................................................................................................

MICRO/HR ISSUES ......................................................................................................................

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  ......................................................................................................................

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 . 

I

.................................................................................................................................. T the latter half of the twentieth century, scholars mostly studied corporate social responsibility (CSR) at the meso- and macro levels of analysis; that is, as a set of company-level practices embedded within broader contexts. Largely absent was the systematic study of individual stakeholders who are affected by, and who react to, CSR initiatives (Frederick, ). Those stakeholders have since become a central focus in contemporary definitions of CSR: the “context-specific organizational actions and policies that take into account stakeholders’ expectations and the triple bottom line of economic, social, and environmental performance” (Aguinis, , ). In hindsight, the lack of such research is surprising, as much of the strategic and financial value that CSR can generate depends on the extent to which it enhances a firm’s relationships with important stakeholders (Barnett, ). This gap in the literature became a historical footnote in the early s (Glavas, b), as evidenced by the current Handbook. While marketing researchers have studied consumer responses to CSR for some time (e.g. Webster, ), researchers in other disciplines have only more recently embraced a person-centric and psychologically grounded approach to the study of CSR at the individual level of analysis, which scholars have dubbed “micro CSR research” (Rupp and Mallory, ). The psychology of CSR represents a massive conceptual space, given the breadth of the discipline of psychology and its many intersections with CSR phenomena. Psychology is about the study of mind and behavior among individuals and groups, and it “embraces all aspects of the human experience—from the functions of the brain to the actions of nations” (APA, ). Micro CSR research has been informed by several subfields and topic domains represented among the fifty-four divisions of the American Psychological Association (e.g. personality and social, industrial and organizational, and consumer psychology), and the points of connection between psychology and CSR are so numerous that it would be arduous to list them all.

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 . 

Of necessity, the scope of this chapter excludes several important streams of micro CSR research.¹ The objectives of this chapter are to describe and advance the psychology of CSR by reviewing research and outlining new avenues of inquiry pertaining to the psychological processes involved in individual stakeholders’ evaluations of, and responses to, an organization’s CSR practices. Throughout, I focus on three stakeholder groups: () employees, () job seekers, and () consumers.² The vast majority of micro CSR scholarship has focused on these three stakeholders (Aguinis and Glavas, ), but there has yet to be a determined effort to compare and integrate these largely independent literatures. Herein, I identify insights from each body of work that can inform the other two. While the literatures on these three stakeholder groups are distinctly different, the fundamental psychological processes through which any individual stakeholder evaluates and responds to CSR practices are the same. Before individuals can respond to an organization’s CSR practices, they must first have some awareness of them. A stakeholder’s CSR awareness can be based on detailed and accurate information, or on uninformed impressions and falsehoods. Either way, without CSR awareness, there can be no CSR perceptions or appraisals that give stakeholders reason to respond. The importance of CSR awareness is well-recognized by marketing researchers who study consumers, but readers of the literatures on employee and job seeker responses to CSR could be forgiven for overlooking its importance, given the relative absence of its empirical study, and even conceptual acknowledgment. The evidence that does exist suggests that CSR awareness among all three stakeholder groups is often quite low, and the implications of this for the science and practice of CSR are anything but trivial.

Chapter Overview In the next section, I describe psychological processes involved in CSR evaluations. I define different types of CSR-evaluation constructs to provide a “common language” for understanding diverse findings, and to inform future research. I also review the types of CSR practices and CSR evaluations that are most commonly studied among employees, job seekers, and consumers. I then go on to review micro-level research on responses to CSR among each stakeholder group. I focus on “how” they respond³ (i.e. the stakeholder attitudes and behaviors linked to CSR) and “why” they respond (i.e. the psychological mechanisms ¹ E.g. not covered are studies on employee green behaviors (e.g. Dumont et al., ; Kim et al., a; Wiernik et al., ), and employee volunteerism (e.g. Jones, ; Rodell et al., ; Rodell and Lynch, ). ² My scholarly expertise includes micro CSR research on employees and job seekers, but I do not profess to have a near exhaustive understanding of research on consumer responses to CSR. ³ Like many micro CSR scholars, I characterize stakeholders’ attitudes, intentions, and behaviors that are empirically linked to CSR as “responses,” but I acknowledge that some observed relationships may be spurious due to the influence of third variables, and might reflect bi-directional causality.

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that explain those responses), and briefly describe “when” they respond (i.e. the boundary conditions for those responses). To help readers make sense of the dizzying number of mechanisms and boundary conditions studied to date, I categorize those that I review within three categories of C-S-R considerations: care-based, self-protective, and relational-status considerations. In the last major section, I focus on the critically important, but still understudied role of CSR awareness in stakeholders’ CSR evaluations and responses to CSR. After reviewing evidence for its levels and effects among each stakeholder group, I describe directions for future study.

S’ CSR E

.................................................................................................................................. Most micro CSR research on employees and job seekers has focused on responses to CSR and drivers of CSR engagement, and considerably less is known about their CSR evaluations: the “processes by which people gather and organize information related to organizations’ CSR initiatives to form judgments” (Gond et al., , ). Research on consumers can inform studies of these two other stakeholder groups, but there is still a great deal to learn in all three literatures. To guide and inspire future research, I define key constructs, and provide a brief summary of the psychological processes involved in CSR evaluations based on the science of social cognition (e.g. Fiske and Taylor, ; Higgins and Bargh, ; Nisbett and Ross, ; Olson et al., ; Trope and Bassok, ).

CSR Awareness, Knowledge, Perceptions, and Appraisals CSR awareness and CSR knowledge Most micro CSR researchers adopt a person-centric phenomenological approach to the study of CSR (e.g. Glavas, b). Stakeholders do not directly⁴ respond to the CSR practices that objectively exist; they respond to their perceptions and appraisals of CSR practices, all of which depend on having some degree of CSR awareness. I define CSR awareness as a stakeholder’s presumptive understanding of an organization’s CSR practices at a given level of specificity (e.g. a single CSR initiative, or a firm’s overall CSR engagement). In colloquial terms, CSR awareness reflects whatever a stakeholder thinks he or she knows about a company’s CSR practices, including factually accurate CSR knowledge, and anything else. In psychological terms, CSR awareness reflects the cognitively encoded sensory inputs that an individual uses to ⁴ Here, but not hereafter, I use the qualifier “directly” to indicate my recognition that CSR can indirectly influence stakeholder responses independent of their CSR evaluations, such as through the effect of CSR on corporate reputation. Also, for the sake of brevity, references to “responses to CSR” are intended to convey “responses to CSR evaluations,” and references to “CSR engagement” refer to the real or perceived extent of an organization’s CSR practices.

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

 . 

form a CSR perception (e.g. information from a website, product label, friends, or direct involvement in a CSR initiative).

CSR perceptions and CSR appraisals The sensory inputs that underlie CSR knowledge and awareness are necessary precursors to CSR perceptions and appraisals. Social perceptions are formed through a combination of bottom-up processing of sensory inputs as the “raw data” enter the brain, and top-down processing in which one imposes meaning on those inputs. Through these processes, people construct psychologically meaningful representations of things that they perceive to “exist” in the social world. CSR perceptions, then, are a stakeholder’s psychological representations of the types and extent of an organization’s CSR practices. Once social perceptions are formed, individuals can incorporate them in higherorder cognitions (e.g. counterfactual thinking, sensemaking), and subject them to various evaluative appraisals. Whereas CSR perceptions are more akin to descriptive “snapshots” of CSR practices, CSR appraisals are more cognitively nuanced evaluative judgments about those practices, such as a stakeholder’s attributions about a company’s motives for its CSR engagement, or assessment of CSR–brand fit. The studies that I review herein have produced important insights about stakeholder responses to CSR by examining the interplay among these different CSR-evaluation constructs, including a few studies that measured CSR awareness.

CSR Practices and CSR Evaluations Studied in Micro CSR Research CSR practices and evaluations in employee research Nearly all micro-level studies of employee responses to CSR are based on data collected from employees (and sometimes their managers) via surveys that include measures of at least one, and usually no more than one, type of CSR evaluation construct. In the great majority of these studies, researchers have tested the effects of employees’ CSR perceptions, rather than CSR appraisals. As described elsewhere (Jones et al., ), most measures of CSR perceptions quantify the perceived extent of an employer’s CSR engagement with respect to one or more conceptual dimensions (e.g. discretionary corporate citizenship) or types of CSR practices.⁵ ⁵ Researchers have most often assessed employees’ CSR perceptions using measures that are more “formative” in nature, meaning that the items used refer to specific CSR practices that cause and collectively define a CSR dimension or overall CSR construct (e.g. “Our company invests in clean technologies and renewable energies”). Researchers have also used “reflective” measures that typically comprise two or three items that reflect effects of a perceived CSR construct (e.g. “This company is a socially responsible member of the community”). Measures of the latter type, I believe, are considerably more susceptible to being confounded by unmeasured CSR appraisals.

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For instance, a recently developed measure of CSR perceptions comprises six dimensions of stakeholder-directed practices targeting the community, customers, ecological environment, employees, shareholders, and suppliers (El Akremi et al., ). Validity evidence across five samples suggests that employees’ CSR awareness is sufficiently nuanced, irrespective of accuracy or depth, that they can perceive differences in their employer’s engagement in these six types of CSR practices. Other findings suggest that these dimensions in combination represent a meaningful secondorder construct (i.e. overall CSR). Consistent with these findings, some researchers have studied employee responses to perceptions of distinct CSR dimensions, whereas others have studied overall CSR comprising multiple types of practices. Caution is warranted, however, when interpreting findings based on measures of perceived CSR that include a mixture of externally and internally directed CSR practices (Jones and Rupp, ). Several mature research literatures document employee responses to the same sorts of human resource practices that many CSR researchers conceptualize as internal CSR (e.g. fair treatment, and other policies and practices that promote employee well-being). When researchers use “mixed” external and internal CSR measures, it is unknown whether the effects they report are driven largely, or even entirely, by internal CSR practices that have already been shown in other literatures to predict the very same types of employee responses.⁶ Researchers can draw clearer inferences and make novel contributions by analyzing separate measures of external and internal CSR practices, as recent studies have done through testing the effects of the former, while controlling for the latter (e.g. Farooq et al., ); their interaction (De Roeck et al., ; Rupp et al., ); imbalances between them (Bridoux et al., ; Scheidler et al., ); and indirect effects through different mechanisms (Farooq et al., ; Hameed et al., ). While most research among employees has focused on the effects of CSR perceptions, a few studies have examined different types of CSR appraisals, such as employees’ beliefs about their CSR-specific autonomy (Rupp et al., ). The most commonly studied type of CSR appraisals are the attributions employees make about the company’s motives for its CSR engagement (e.g. Donia et al., , ; Vlachos et al., ). These studies consistently show that employees who make stronger intrinsic values-driven CSR attributions have more positive job attitudes and behaviors that contribute to the organization’s success. Almost all of these studies, however, have examined CSR attributions without accounting for the much more commonly studied effects of CSR perceptions. Among nine articles that I located that reported tests of CSR attributions across fifteen employee samples, only one incorporated the effects of perceived CSR. De Roeck and Delobbe () found that the relationship between perceptions of environmental practices and employee trust was stronger among employees who attributed more strategic and self-serving motives for their employer’s CSR engagement. ⁶ For this reason, in Jones and Rupp (), we restricted our review to studies that report effects of external CSR on employee and job seeker responses.

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

 . 

CSR practices and evaluations in job seeker research While research on job seekers has explored responses to multiple CSR dimensions, most of this work has focused on environmental and/or community-directed practices.⁷ In most of these studies, researchers manipulated the presence and/or type of CSR information given to participants who played the role of job seekers. Measures of CSR evaluations have often been used in manipulation checks, but only a few studies have used such Measures of CSR evaluations have often been used in manipulation checks, but only a few studies have used such measures in hypothesis testing (e.g. Story et al., ). For instance, Joo et al. () assessed their CSR manipulations using measures of perceived CSR and a CSR appraisal (attributed CSR motives), but did not report any relationships between these measures and organizational attractiveness.

CSR practices and evaluations in consumer research Compared to the two other literatures, studies among consumers have more often focused on responses to specific CSR initiatives, rather than broader CSR dimensions or overall CSR. According to a thorough, albeit somewhat dated, review of studies reported in over  articles (Peloza and Shang, ), CSR practices pertaining to corporate philanthropy were examined in  percent of the studies reviewed, such as donations of money, products, and services, and especially cause-related marketing initiatives in which a promised charitable donation is tied to product purchases.⁸ Over half of the quantitative studies reviewed used experimental methods, and about  percent were based on surveys. Since this review, studies among consumers have continued to flourish. Research among consumers has incorporated different types of CSR evaluation constructs to a far greater degree compared to the two other literatures. Marketing researchers tend to use the term “CSR associations” to refer to what I and other micro CSR scholars call “CSR perceptions.” Lee et al. (), for example, found that consumers with higher CSR awareness had more positive CSR associations with respect to the company’s socially responsible image (i.e. higher perceived CSR). These authors also found evidence for a type of CSR appraisal—the credibility of the firm’s CSR engagement—as an underlying mechanism through which CSR perceptions influenced consumers’ intentions to participate in the firm’s community service initiative. I will review research on consumers’ CSR awareness in my section on Stakeholders’ CSR Awareness, and in the section before that, on Stakeholder Responses to CSR, I describe eight other CSR appraisals that have been studied as mechanisms and boundary conditions that explain and shape consumer responses to CSR (three types of CSR attributions, trust in the firm’s CSR commitment, identification with the CSR ⁷ In Jones and Rupp (), we describe in Table . how external CSR was operationalized in thirty cited tests on job seeker responses across twenty-one samples. ⁸ These same authors reported that CSR practices relating to business operations and product features were examined in about half and one-third of the reviewed studies, respectively (Peloza and Shang, ).

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practices, beliefs about CSR–corporate ability tradeoffs, the extent the CSR practices are more proactive versus reactive, and CSR–brand fit).

Future research on CSR perceptions and appraisals Recent studies have explored novel CSR perception constructs that open new avenues for future inquiry. Theoretical work, for example, suggests that stakeholders respond to their perceptions of irresponsible and exploitive business practices through different mechanisms than those involved in responses to perceived CSR (Voliotis et al., ). In empirical work, some researchers have aggregated individual-level CSR perceptions to create firm-level constructs (e.g. organizational CSR climate: Shen and Zhang, ), but this approach is largely limited to employees who can psychologically experience such group-level constructs. Other researchers have used CSR perceptions to create measures of other constructs that can be adapted to any stakeholder context (e.g. employee– company environmental fit, calculated as the cross-product of employees’ perceptions of environmental practices and their own environmental orientations: Spanjol et al., ). Another “stakeholder-agnostic” CSR perception construct can and should be used in future studies on how stakeholders respond to different forms of a pervasive CSR phenomena of great practical importance. Scheidler et al. (, study ) measured employees’ perceptions of inconsistent CSR practices favoring external over internal stakeholders by subtracting the latter from the former. Results showed that perceptions of external and internal CSR practices had negligible or favorable effects on employees’ beliefs about corporate hypocrisy, emotional exhaustion, and turnover intentions. In contrast, the measure of perceived inconsistency between those CSR practices had unfavorable effects on all three employee responses. Moreover, the pattern of individuallevel effects found on turnover intentions was replicated in a second study using firm-level turnover rates and objective measures of CSR for  companies. Scheidler et al.’s () findings complement other recent evidence from experimental (Bridoux et al., ) and field studies (De Roeck et al., ) that likewise demonstrate negative stakeholder responses to practices that are perceived to favor some stakeholders over others. Unequal investments across a company’s portfolio of CSR practices is presumably the norm, rather than the exception, and pronounced differences of certain types likely have meaningful effects on stakeholders’ responses. Consider, for example, companies that pursue low-cost strategies to achieve competitive advantage through scale (e.g. Amazon, Wal-Mart). How do employees respond if they perceive that their employer consistently prioritizes the interests of customers (e.g. low prices) ahead of its employees (e.g. low compensation)? What proportion of consumers are apt to register their discontent with this perceived imbalance by “voting with their wallets”? Can companies mitigate such potentially negative responses by better communicating the rationale for their imbalanced CSR investments? In contrast, other companies have reputations for prioritizing the interests of their employees under the stated assumption that “happy workers make happy customers” (e.g. Costco, Southwest Airlines). How do employees, consumers, investors, and other stakeholders respond to perceived imbalances of this type? Scheidler et al.’s () measurement

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

 . 

approach is well suited to study these and other such questions that can advance micro CSR theory and inform practice. I also encourage research among employees and job seekers that follows the example set by studies of consumers in which CSR manipulations and perceptions are studied in the context of CSR appraisals. A few studies among employees have contributed to the literature by testing interactions between CSR perceptions and CSR appraisals (De Roeck and Delobbe, ; Rupp et al., ), and examining the relationships between them (e.g. Lee et al., ). More of such research is needed, and all three literatures would benefit from incorporating multiple considerations involved in causal attributions (e.g. locus, stability, and controllability: Anderson et al., ). While there is much still to learn about stakeholders’ CSR evaluations, there is considerably less ambiguity about how and why stakeholders respond to them.

S R  CSR

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“How” do Stakeholders Respond to CSR? Employee responses In recent years, there has been an explosion of micro-level research on responses to CSR among job seekers and, especially, employees. By the end of , over two-thirds of such published work had appeared since the start of  (Glavas, b), and this trend continues unabated. The rapid growth of these literatures has motivated several recent reviews (Glavas, b; Gond et al., ; Jones and Rupp, ), so I intentionally describe and cite studies that have been published since the periods covered by those reviews. Evidence from a considerable number of studies links employees’ CSR perceptions and appraisals to a host of job attitudes and behaviors that contribute to organizational performance.⁹ Employees who perceive greater CSR engagement tend to have higher organizational commitment, trust in their employer, job satisfaction, organizational identification (a sense of “oneness” with the organization), work engagement, and intentions to remain. They also tend to engage in more extra-role performance and citizenship behaviors, and sometimes exhibit stronger in-role job performance. Most of this evidence is based on data collected from employees at one point in time, but similar findings are reported in studies that use data collected at multiple ⁹ Gond et al. () conducted a thorough review of  micro CSR articles that focused on prospective and current internal stakeholders (i.e. job seekers, employees, middle managers, and executives). With respect to research on how employees respond to CSR, in an online supplement the authors cite thirty studies that report effects on organizational commitment, and twenty-four studies that report effects on extra-role performance and citizenship behaviors. For effects that are restricted to external CSR, see Table . of Jones and Rupp () in which we describe  cited tests across thirtyeight employee samples.

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points and/or from multi-sources, such as supervisor ratings of job performance (Jones and Rupp, ). Recent studies have explored novel employee responses to CSR that open new directions for future research, including employees’ quality of work life (Kim et al., b), the ethicality of their expense reporting (Beaudoin et al., ), and a type of CSR appraisal: support for the firm’s external CSR (Shen and Zhang, ). Another study linked perceptions of environmental and community-directed CSR practices to employees’ prosocial behaviors outside of work to support their community (De Roeck and Farooq, ).

Job seeker responses Findings from over twenty-five samples show that CSR practices have a causal influence on job seeker responses (Gond et al., ; Jones and Rupp, ). Most studies report effects on applicant attraction or organizational attractiveness, and about half of them also or alternatively report effects on job pursuit intentions. These findings convincingly show that CSR practices have the potential to create value for companies by enhancing their ability to identify and hire top performers. There is some, but relatively little, evidence showing that CSR actually does influence job seekers’ attraction in actual employment search contexts. This literature can be advanced by studying the effects of active job seekers’ CSR evaluations on job choice decisions and other responses during the later stages of the employment search process (e.g. intentions to remain in an applicant pool, the use of a “CSR filter” to narrow the number of employers under consideration, and efforts to obtain CSR information from recruiters, corporate websites, and other sources). Research on job seekers should also incorporate CSR appraisals (e.g. CSR attributions), and build on findings showing that gig workers are willing to sacrifice pay to complete short-term work for socially responsible employers (Burbano, ), and that CSR can help attract job seekers to permanent positions even when the compensation is below the industry average (Rupp et al., , study ).

Consumer responses Reviews of consumer research suggest that CSR practices have the potential to bring meaningful financial returns to companies (e.g. Bhattacharya and Sen, ; Smith and Langford, ). Positive effects of CSR manipulations and CSR evaluations on consumers’ attitudes toward the company and brand, and on their purchasing intentions, have been reported in a great many studies; and multiple studies have demonstrated effects on consumers’ willingness to pay a price premium, self-reported purchases, product and service evaluations, and referral intentions (Peloza and Shang, ). Other research has linked CSR practices to higher customer satisfaction (Andreassen and Lindestad, ) and loyalty (Du et al., ), improved customer acquisition (Smith and Alcorn, ), and reduced risk (e.g. from consumer boycotts: Luo and Bhattacharya, ).

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Well-replicated evidence demonstrates the causal influence of CSR practices on consumer attitudes and behavioral intentions, but relatively less evidence informs whether and the extent that these findings translate into purchasing behavior and other responses in real market contexts. One recent exception, however, is a study of employee training in CSR communication in which the researchers measured several variables via surveys completed by about , customers of a restaurant chain (Schons et al., ). Effects were found on the customers’ restaurant visits and purchase volume during the nine-month period following the survey, based on data obtained from customer loyalty cards.

“Why” do Stakeholders Respond to CSR? A C-S-R considerations framework Evidence from the three literatures shows that stakeholders’ CSR evaluations can and do influence their responses, and other evidence provides support for a number of mechanisms that help explain “why.”¹⁰ In statistical terms, these mechanisms are tested as mediators or intervening variables in the indirect effects of CSR on stakeholder responses. To guide readers through my review, I classify mechanisms (and moderators reviewed later) within three categories of C-S-R considerations: () care-based, () selfprotective, and () relational-status considerations. This C-S-R considerations framework is a modified version of an earlier effort to develop an organizing scheme, rather than a falsifiable theory (Jones and Rupp, ).¹¹ The three categories encompass, but are not limited to, three needs-based motives that are theorized as drivers of CSR engagement and responses to CSR (e.g. Rupp et al., ). Carebased consisderations include deontic or moral motives for CSR that stem from the need for meaningful existence; self-protective considerations encompass instrumental CSR motives based on the need for psychological and behavioral control; and relational-status considerations include relational CSR motives that arise from the need for belongingness. The three categories are broad by design, and include psychological considerations involving characteristics of the stakeholder, CSR practices, company, and context. Care-based considerations reflect connections between the CSR practices involved and factors that are grounded in an entity’s prosocial values, and other moral and ethical considerations. Self-protective considerations lie at the intersection between CSR practices and an entity’s desires to protect their own interests or pursue personal

¹⁰ Gond et al. () e.g. cite studies in their online supplement that collectively report seventy tests of mediating mechanisms among employees, organized within six categories. They also cite over twenty studies that report tests of underlying mechanisms in research on job seekers. ¹¹ This revised framework includes minor changes to the category labels that reflect clarifications to the domain and scope of each category as described in this chapter. I make no attempt to reify these categories as psychological constructs. I also recognize the inherent subjectivity in classifying variables in a given category, and that many variables plausibly reflect elements of multiple C-S-R considerations.

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gain (e.g. a stakeholders’ considerations of how CSR practices affect or otherwise relate to their own interests, or the attributions they make about another entity’s motives to pursue personal gain). Relational-status considerations pertain to the links between CSR practices and/or their implications for an entity’s social identities, status and reputation, and relationships with the company or other stakeholders. In Table ., I cite evidence for mechanisms that help explain responses to CSR among of each stakeholder group, organized within the three C-S-R considerations. Table 2.1 Why do Stakeholders Respond to CSR? Illustrative Mechanisms that Reflect C-S-R Considerations Care-Based Stakeholders Considerations

Self-Protective Considerations

Employees

ability to be authentic at emotional exhaustion (Scheidler et al., work (Glavas, 2016a) 2019, Study 1) attributed genuine perceived respect motives for (Farooq et al., 2017, CSR (Vlachos et al., Studies 1 and 2; 2017) Hameed et al., 2016) compassion at work ! intrinsic motivation (Hur et al., 2018) ethical leadership (De Roeck and Farooq, 2018; Gao and He, 2017; Hansen et al., 2016)

Job Seekers

perceived value fit (Jones et al., 2016)

Consumers

attributed values-driven attributed strategic CSR motives (Groza et al., CSR motives (Groza 2011, Studies 1 and 2; et al., 2011, Studies 1 Walker et al., 2010) and 2; Walker et al., trust in the company 2010) (Hillenbrand et al., CSR credibility (Lee 2013; Lin et al., 2011) et al., 2019) trust in the firm’s CSR commitment (Kim, 2019)

Relational-Status Considerations external prestige (Farooq et al., 2017, Studies 1 and 2; Hameed et al., 2016) external prestige ! organizational pride (De Roeck et al., 2016) organizational identification (De Roeck and Farooq, 2018; Farooq et al., 2017, Studies 1 and 2; Tian and Robertson, 2019) organizational pride (Edwards and Kudret, 2017)

coworker characteristics and expected employee potential friendships (Jones treatment (Burbano, et al., 2016) 2016; Jones et al., organizational reputation (Story 2016) et al., 2016) overall justice (Joo et al., 2016) trust (Bridoux et al., 2016) and trustworthiness (Burbano, 2016) attributed stakeholder CSR motives (Groza et al., 2011, Study 2; Walker et al., 2010) customer-company character fit (Sen and Bhattacharya, 2001) identification with the company (Lin et al., 2011; Schons et al., 2019) quality of relationship with the company (Lee et al., 2019)

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Given that Jones and Rupp () largely did the same in their review of employee and job seeker studies published up to the end of ,¹² for those stakeholder groups I cite studies that were published or accepted for publication since that time, through to March .

Mechanisms that help explain employee responses This literature includes over seventy-five tests of various mechanisms that mediate relationships between CSR evaluations and employee responses. Mechanisms derived from social identity theory are especially prevalent, such as those listed in Table . as relational-status considerations. In short, employees tend to respond positively to their employer’s CSR engagement because it gives them reason to feel proud and brings prestige to the organization (and by extension, to themselves), and enhances their identification with the organization as part of how they define themselves as people. Mechanisms that reflect self-protective considerations are also commonly studied, including those involved in employees’ social exchange relationship with their employer, such as the extent that they trust their employer, and perceive that it supports and treats them fairly. Table . includes one such mechanism: perceived respect. Support for these sorts of mechanisms points to another set of reasons that explain why employees respond more positively to greater CSR engagement: it leads them to trust their employer, and to believe it will treat them like it treats other stakeholders (i.e. with fairness, support, and respect). A different type of self-protective consideration is apparent in findings from the first study listed in Table ., suggesting that employees were more intent on leaving when they perceived CSR practices that favored external stakeholders over themselves because it contributed to their emotional exhaustion. Other underlying mechanisms reflect care-based considerations, and the examples cited in Table . suggest that employees respond more positively to their employer’s CSR engagement when they attribute genuine motives for it, and because it fosters ethical leadership in the company, and allows employees to demonstrate compassion and authenticity at work motives for it, and because it fosters ethical leadership in the company, and allows employees to demonstrate compassion and authenticity at work. Glavas has urged CSR scholars to adopt a more humanistic research agenda (Aguinis and Glavas, ; Glavas, b), which appears to be largely grounded in other carebased considerations. A few studies suggest, for example, that CSR is associated with a stronger sense of meaningfulness at and through work (e.g. Seivwright and Unsworth, ). Support has also been found for related mechanisms like task significance (Raub and Blunschi, ) and experienced meaningfulness at work (Glavas and Kelley, ). The connections between CSR practices and employees’ sense of meaningfulness is a promising direction for future research. I also echo calls to consolidate theory and bridge the different mechanisms studied thus far (De Roeck and Maon, ; Gond et al., ). To this same end, Glavas (b) rightly suggests that studies are needed in ¹² In Table . of Jones and Rupp (), we cite supporting evidence for ten mechanisms involved in employee responses to external CSR, and for six mechanisms supported in research among job seekers. In Table . of this chapter, the cited examples are not restricted to the effects of external CSR practices.

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which multiple mechanisms are brought together to identify their relative importance and potential redundancies.

Mechanisms that help explain job seeker responses Research among job seekers has also found support for mechanisms pertaining to each category of C-S-R considerations, including two studies that found support for all three (Jones et al., ). Findings from a longitudinal experiment provided support for three signal-based mechanisms that explained why participants were more attracted to an employer when its webpages did (versus did not) describe its environmental or community-focused CSR practices. In a field study, job fair attendees completed survey measures in reference to an employer that was among their top choices. Results showed that perceptual and objective measures of each employer’s community-focused (but not environmental) CSR practices had indirect effects on attraction through the same types of mechanisms. These findings suggest that job seekers are attracted by external CSR practices because they send signals about: (i) the employer’s values, which job seekers use to assess perceived value fit (a care-based consideration); (ii) the employer’s prosocial nature, which shapes their expectations about how the employer would treat them (a self-protective consideration); and (iii) the employer’s reputation and prestige, which informs the pride that they anticipate as employees (a relational-status consideration). Table . shows that evidence for all three types of C-S-R considerations has continued to accumulate in the two years or so following the period covered by Jones and Rupp’s () review. In addition to further evidence for previously established mechanisms using different methods and designs, Table . includes support for two self-protective considerations that were first studied among employees: trust and the employer’s overall fairness. A novel relational-status consideration listed in Table . from a more exploratory study suggests that some job seekers are attracted by CSR because it leads them to believe that they could form desired friendships with would-be coworkers of a certain nature. In contrast to the proliferation of different mechanisms that have been examined among employees, exploratory studies of this type could help identify other mechanisms that explain job seeker responses to CSR.

Mechanisms that help explain consumer responses Some of the mechanisms most commonly studied among consumers defy classification within the three C-S-R considerations. In particular, numerous studies have found support for consumers’ beliefs and attitudes about the company or its brand as underlying mechanisms (e.g. Peloza and Shang, ; Smith and Langford, ). The effects of CSR practices on liking or disliking a brand, for example, are presumably shaped by C-S-R considerations, but absent from many of these studies is evidence that informs finergrained insights. However, other supported mechanisms among consumers do reflect C-S-R considerations, such as the illustrative examples that are cited in Table .. One important type of CSR appraisal that has been studied in all three literatures has its roots in pioneering research among consumers: CSR attributions. In Table ., the first mechanism listed for consumers within each category of C-S-R considerations is

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supported by experimental and field studies showing that three types CSR attributions mediate the effects of CSR practices on consumer responses. Reflecting care-based considerations, responses to CSR were more positive when consumers made stronger attributions about values-driven motives (e.g. the firm believes that CSR is the right thing to do). Self-protective considerations are demonstrated in findings showing that, in some contexts, consumer responses to CSR were more positive, and in other contexts more negative, when they made stronger attributions about strategic motives (e.g. the firm engages in CSR as part of its business strategy). Relational-status considerations are seen in effects found in both directions through stakeholder-driven CSR attributions (e.g. responses are more negative when the firm is perceived to be engaging in reactive CSR in response to pressure from its stakeholders). Two other CSR appraisals that are listed in Table . reflect care-based considerations: consumers respond more positively when they believe that the firm’s CSR engagement is credible and trustworthy. Consumers also respond more positively when CSR practices lead to greater trust (a self-protective consideration), and other examples in Table . suggest that they respond more positively when CSR practices enhance their relationship and identification with the company, and their ability to see themselves in its character (relational-status considerations).

“When” do Stakeholders Respond to CSR? Across the three literatures, support has been found for several factors that create boundary conditions that define “when” stakeholders are more or less likely to respond to CSR.¹³ In statistical terms, these factors are moderators of the effects of CSR on stakeholder responses, which means that the strength and/or direction of those effects differ, depending on levels of the moderating factors. Below, I briefly summarize moderators that have been studied among consumers to provide examples that illustrate the three C-S-R considerations, and to draw attention to different types of CSR appraisals that hold promise for advancing research among employees and job seekers. For interested readers, I cite evidence in Table . for moderators among all three stakeholders that reflect the three categories of C-S-R considerations. Research among consumers has identified a number of moderators that shape their responses to CSR (e.g. Du et al., ; Smith and Langford, ),¹⁴ including several that reflect C-S-R considerations. Care-based considerations are demonstrated in studies listed in Table . showing that consumers respond more positively to CSR when they attribute genuine motives for it, support the CSR issue domain, believe the ¹³ E.g. Gond et al. () cite studies that collectively report twenty-one tests of moderators in employee research, and fourteen studies that report sixteen tests of moderators in job seeker research. For moderators of external CSR effects among both of these stakeholders, see Table . of Jones and Rupp (). ¹⁴ My use of the term “moderators” includes variables that were not tested as moderators in some studies among consumers, but the nature of the analyses and research designs position those variables as moderators of CSR effects.

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Table 2.2 When do Stakeholders Respond to CSR? Illustrative Moderators of CSR Effects that Reflect C-S-R Considerations Stakeholders Care-Based Considerations

Self-Protective Considerations

Relational-Status Considerations

CSR autonomy (Rupp et al., 2018) cultural individualism (Farooq et al., 2017, Study 2; Rupp et al., 2018) distributive justice (Gao and He, 2017) internal CSR (Shen and Zhang, 2019) overall Justice (De Roeck et al., 2016) temptation for personal gain (Beaudoin et al., 2019) trust propensity (Hansen et al., 2016)

cosmopolitan and local orientations (Farooq et al., 2017, Studies 1 and 2) cultural collectivism (Farooq et al., 2017, Study 2)

Employees

calling orientation (Hameed et al., 2016) empathy (Tian and Robertson, 2019) ethical leadership (Lin and Liu, 2017)

Job Seekers

moral identity (DeGrassi, 2017) attributed self-serving other orientation (Bridoux et al., motives for CSR 2016) (Joo et al., 2016) firm performance (DeGrassi, 2017)

Consumers

attributed genuine CSR motives (Sen et al., 2006) beliefs about firm responsibility for the CSR issue (Mohr and Webb, 2005) self-transcendent values (Golob et al., 2008) support for the CSR issue domain (Sen and Bhattacharya, 2001) values-motivated (Basil and Weber, 2006)

CSR-corporate ability tradeoff (Sen and Bhattacharya, 2001) product quality (Luo and Bhattacharya, 2006) self-enhancement values (e.g., hedonism, power: Golob et al., 2008)

concern for appearance (Basil and Weber 2006) identification with the company (Kim, 2019) identification with the CSR practices (Sen and Bhattacharya, 2001)

company has responsibilities for the CSR issue, and are motivated by self-transcendent and other such values. Table . also includes three relational-status considerations, suggesting that responses are more positive among consumers who are driven by concerns for appearance, and who identify more with the company and its CSR practices. Notably, the latter is a novel type of CSR appraisal that has yet to be studied among job seekers or employees.

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Characteristics of the company have further been shown to moderate consumer responses to CSR, including two that are listed in Table . as self-protective considerations pertaining to the perceived implications of CSR for product quality. One of those moderators is a type of CSR appraisal: Consumers’ responses to CSR are more favorable when they believe that the CSR activity contributes to, or at least does not detract from, the company’s ability to produce high-quality products or services. But when consumers believe CSR initiatives are performed at the expense of corporate ability, purchasing intentions decrease. Other CSR appraisals tied to company characteristics have been found to moderate consumer responses, but are not included in Table ., given ambiguity about their potential links with multiple types of C-S-R considerations. For example, consumers respond more positively to proactive CSR practices, as opposed to practices that appear to be a reactive defensive response to stakeholder or competitive pressures (e.g. Bhattacharya and Sen, ). Another CSR appraisal that is among the most frequently studied moderators among consumers is their belief about the fit between the CSR activities and the company’s brand or market strategy. Most, but not all, studies find that greater CSR–brand fit enhances consumer responses (Peloza and Shang, ). Future research on moderators of consumer responses to CSR could benefit from “borrowing” some of the individual differences studied among employees and job seekers, such as those listed in Table . (e.g. moral identity, trust propensity, and cultural values). And future studies among employees and job seekers would benefit from “borrowing” some of the moderators studied among consumers (e.g. identification with the CSR practices, and the extent CSR is more proactive versus reactive), as a few researchers have already done. One study among employees found support for the same type of corporate ability moderator found among consumers: employees’ CSR perceptions had a stronger effect on organizational identification when they perceived higher levels of corporate ability (Brammer et al., ). Another research team drew on consumer studies of CSR-brand fit and corporate ability to develop hypotheses about two other types of CSR appraisals: CSR–corporate culture fit and the company’s CSR capability (Lee et al., ). Results showed that both CSR appraisals predicted employees’ perceptions of CSR, which in turn predicted greater attachment to their employer. A particularly important moderator that was first identified by marketing researchers, CSR awareness, has been tested in three studies of stakeholder responses to CSR. Next, I describe these and other findings, and their implications for the science and practice of CSR are of such importance that I can think of no other topic more worthy of future study.

S’ CSR A

.................................................................................................................................. As several marketing researchers have recognized (e.g. Du et al., ; Mohr et al., ; Smith and Langford, ), CSR practices—no matter how extensive and

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commendable—are incapable of directly invoking positive responses from stakeholders who have no awareness of them. In this section, I review what is known about CSR awareness among each stakeholder group, and describe future research needs and directions.

Research on CSR Awareness: Its Levels and Effects among Different Stakeholders CSR awareness among employees In a study of  hotel workers in the UK, CSR awareness had indirect effects on employees’ citizenship behaviors and other responses (Raub and Blunschi, ). But more to the present point, the employees’ CSR awareness varied, and the average response was below the agreement range of the scale (M = ., SD = .; e.g. “I have a great deal of knowledge about [hotel’s] CSR initiatives”). Other researchers report that many employees in the European Union had limited understanding of their employer’s sustainability practices (Madsen and Ulhi, ), and that low CSR awareness among employees is a common barrier to the success of CSR initiatives (Garavan et al., ). Two studies demonstrate the important implications of CSR awareness by showing that it moderates the effects of CSR perceptions on employee responses. Du et al. () measured “CSR proximity” among female professionals in the US, and one of the two items they used was about CSR awareness (“How much do you know about your organization’s social initiatives?”; M = . on a five-point scale, SD = .). Results showed that the effects of CSR perceptions on enhanced job satisfaction and lower turnover intentions were significantly stronger among employees with higher (versus lower) CSR proximity/awareness. Similar results were found among employees in India (Chaudhary, ): perceptions of overall CSR had little effect on intentions to leave among those who reported being unaware of their employer’s CSR; but among employees who claimed that they were aware, those who perceived greater CSR engagement were less intent on leaving the company. The need to understand the causes, typical levels, and effects of employees’ CSR awareness is further highlighted by studies based on single-company samples, which consistently report variability in employees’ CSR perceptions (e.g. El Akremi et al., , studies , , , and ; Hansen et al., , studies  and ). In these and other such studies, the employees worked in the same company, and they evaluated the same objective set of CSR practices. Yet, they reached different conclusions about the extent of their employer’s CSR practices, and those who perceived greater CSR engagement had more favorable job attitudes and behaviors. An important implication of these findings seems to have escaped researchers’ attention: some employees who underestimated the true extent of their employer’s CSR might have exhibited more favorable responses if their CSR knowledge and awareness had resulted in CSR perceptions that were closer to the truth.

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CSR awareness among job seekers Little is known about how job seekers learn about a prospective employer’s CSR practices (Jones and Willness, ), or even if many of them ever do. Three studies showed that US business students were more attracted to large companies that were independently rated as having higher CSR engagement (Albinger and Freeman, ; Luce et al., ; Turban and Greening, ). It is not clear, however, if these results reflect any real degree of CSR awareness, as findings from two of these studies point to the influence of third variables (e.g. corporate reputation, Turban and Greening, ; and employer familiarity, Luce et al., ). Other researchers collected third-party ratings of CSR performance across  “well-known” global companies, and perceptual data from , people in six countries, including  “future employees” who were students expecting to graduate within the next eight months (Peloza et al., ). Results demonstrated a meaningful gulf between CSR perceptions and CSR reality. The field study among job fair attendees that was described earlier showed support for three underlying mechanisms that explained why they were more attracted to an employer of interest when they perceived greater community-directed CSR engagement (Jones et al., , study ). We also created an objective measure of the same CSR practices by coding information in each employer’s poster display and other recruitment materials. We found the same pattern of results using this objective measure of CSR, and it was significantly correlated with job seekers’ perceptions of each employer’s CSR (r = .). These findings suggest that some of these job fair attendees probably learned about a preferred employer’s CSR practices through its poster display and other recruitment materials. Beyond this, little else is known about whether, how, and in what contexts job seekers learn about employers’ CSR practices. One important study, however, demonstrates why such research is needed. Sen et al. () conducted a field experiment in the context of a philanthropic gift from Procter & Gamble to a US university. The gift was widely publicized through multiple channels to which the university’s students were exposed. Among  sampled students, only  percent could recall the donor’s name, and these CSR-aware students had stronger intentions to seek employment with the company, and to consume its products.

CSR awareness among consumers While several marketing researchers have acknowledged the importance of CSR awareness, studies that document its causes, levels, and impact among consumers are surprisingly few in number. Informed by interview data, Mohr et al. () asserted that CSR awareness is probably quite low among most consumers, given the challenges of acquiring and encoding information about the CSR practices of a great many companies that offer products and services that consumers want to buy (see also Peloza et al., ). Bhattacharya and Sen () characterized evidence from their program of research by stating, “the findings from both our focus groups and survey research show that there is significant heterogeneity among consumers in terms of awareness and knowledge of companies’ CSR activities: while there certainly are a handful of ‘CSR

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mavens,’ large swaths of consumers do not seem to be aware that by and large most companies engage in CSR initiatives” (p. ). These conclusions have been corroborated by subsequent research. Studies in which CSR awareness was measured show that it varies considerably among most consumers, and that CSR awareness is quite low among a good number of them. In three studies that I located, the mean levels of CSR awareness were below the agreement range of the response scales (Kim, ; Lee et al., ; Walker et al., ). Consistent with other findings (Du et al., ; Sen et al., ), a study of  Australian bank customers found that strikingly few of them could correctly identify which of four banks were engaged in twenty actively promoted CSR initiatives (Pomering and Dolnicar, ).

Implications of CSR Awareness and Future Research Needs Implications for practice The existing evidence consistently points to meaningful variability in CSR awareness, and average levels that are moderate to low across all three stakeholder groups. Among external stakeholders, CSR awareness is probably low more often than high, especially among most consumers. There are contexts in which job seekers’ CSR awareness may trend toward moderate or moderately high (e.g. during the later stages of a hiring process, or whenever they are exposed to information about a preferred employer’s CSR practices). But otherwise, most job seekers likely have low CSR awareness. Among employees, CSR awareness is presumably relatively higher, but it can be pervasively low among them as well. The implications of low CSR awareness are non-trivial, as demonstrated in three studies that examined the moderating influence of CSR awareness. Specifically, the potential for CSR practices to invoke positive responses from stakeholders is largely dependent on having some degree of CSR awareness. Low CSR awareness creates a barrier to generating value from CSR through positive stakeholder responses. But this barrier is also an opportunity to unlock potential value from CSR practices by enhancing stakeholders’ CSR awareness to generate increasingly positive responses from increasingly greater numbers of stakeholders. Among employees, evidence from single-company samples highlights a missed opportunity of some unknown, but potentially large magnitude. For CSR-engaged organizations, the opportunity lies in the potential to generate additional positive responses among the subset of employees who underestimate the true extent of their CSR engagement. Researchers should study how internal CSR communication can be used to enhance employees’ CSR knowledge and awareness, which might offer a costeffective means to generate positive responses, as suggested by studies of CSR awareness training (Cook and Seith, ; Hui et al., ). Research is needed to understand the major sources of CSR information that inform employees’ CSR knowledge and awareness. A few studies suggest that employees’ CSR

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evaluations are influenced by their managers’ beliefs about the company’s CSR (e.g. Vlachos et al., ), but the mechanisms involved are unclear (e.g. direct communication of CSR policies, or story-telling about participating in a CSR initiative). A study of employee engagement in environmental practices and behavior points to other plausible information sources, including published CSR policy statements and reports, unitlevel CSR targets and goals, and employee training (Ramus and Steger, ). Even less is known about the sources of CSR information on which job seekers draw, leaving recruiters with few clues about where and how to communicate about CSR (Jones and Willness, ). Research is needed to understand the causes, levels, and consequences of CSR awareness among active job seekers, especially given that most studies have used controlled designs in which CSR information is given to participants via short vignettes, job ads, recruitment brochures, and other materials. While the external validity of these studies is unknown, it is quite likely bounded by the proportion of active job seekers who believe that they know something about the CSR practices of their employers of interest. While more is known about the common sources of CSR information used by consumers (e.g. mass media, corporate communications, certification labels, and word-of-mouth), studies are needed to better understand how different information sources affect consumers’ subsequent CSR perceptions and appraisals. For instance, some researchers have studied how different sources of CSR information shape consumers’ CSR awareness, perceptions, and appraisals (Lee et al., ), as well as the attributions that they make about the company’s CSR engagement (Groza et al., ). Also informative is research on employees’ CSR communication during point-of sale interactions with customers (Schons et al., ). Low CSR awareness among consumers creates a considerable challenge for companies that seek to gain competitive advantage through CSR, as some studies have shown that widespread promotion of CSR initiatives barely “moved the needle” on consumers’ CSR awareness. A major brand of oral care products, for example, launched a largescale CSR initiative focused on providing education, tools, and services to promote oral health in economically disadvantaged communities. Despite making considerable investments in national outreach to gain market share from the leading brand, among a sample of  targeted consumers who did not actively participate in the outreach campaign, only thirty-six (%) of them were aware of the CSR initiative (Du et al., ). The difficulty in overcoming the challenge of low CSR awareness is also highlighted by Sen et al.’s () findings that were reviewed earlier: despite being repeatedly exposed to messages about a philanthropic gift,  percent of those sampled had no CSR knowledge of the donor’s identity. There is a well-recognized gap between consumers’ “responsible” purchasing intentions and actual purchasing behavior (e.g. Luo and Bhattacharya ; Smith and Langford, ), and much of it may be attributable to low CSR awareness (e.g. Peloza et al., ). When CSR-motivated consumers have little understanding of the CSR practices used by the many companies that offer products and services of interest, they are forced to choose between investing considerable time and energy to learn

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about those companies’ CSR practices versus forgoing such considerations in their purchasing decisions. Indeed, some of the consumers who were interviewed by Mohr et al. () claimed that they wanted to consider CSR in their purchasing decisions, but rarely did so because they lacked the requisite knowledge. Some companies overcome the CSR awareness challenge by actively engaging consumers in their social and environmental missions. Seventh Generation, for example, uses multiple channels (e.g. social media, blogs, an e-newsletter, and traditional paid media) to enhance CSR awareness among millions of current and prospective customers, and actively engage them in the pursuit of the company’s mission to “inspire a consumer revolution that nurtures the health of the next seven generations” (J. Bergstein, CEO, personal communication, November , ). Within ten months after launching Generation Good, for example, the company’s web-based forum attracted , members who then engaged friends within their networks and extended the reach of the company’s messages to  million people. Ben & Jerry’s combines its core competencies in digital marketing and corporate activism to widely communicate their prosocial and environmental values and practices, and ultimately attract new customers, enhance brand loyalty, and engage their “fans” in achieving social and environmental change. Ben & Jerry’s also measures and monitors CSR awareness among its customers base (J. Solheim, CEO, personal communication, August , ). And both companies actively leverage and communicate about CSR¹⁵ to attract and retain a highly committed workforce. These two companies use core competencies at a mastery level to increase their stakeholders’ CSR awareness. As a result, it is a near certainty (all else equal) that they generate greater returns per unit of CSR investment, compared to companies whose stakeholders have lower CSR awareness. Micro CSR scholars have an exciting opportunity to inform an evidenced-based understanding of CSR awareness and CSR communication practices. To facilitate this work, I next describe ways to measure and study CSR knowledge and awareness in the context of the research objectives, CSR practices, and stakeholders involved.

Approaches to measure and study CSR knowledge and awareness Measures of CSR knowledge are well-suited for use as criterion/dependent variables in research on CSR education and awareness training, and in studies of CSR communication channels and strategies. CSR knowledge can also be measured as a predictor, mediator, or moderator in studies of stakeholder responses to specific CSR initiatives, cause-related marketing campaigns, or one-time events. Dichotomous measures of CSR knowledge include whether a stakeholder can correctly recall the name or other detail about a specific CSR initiative or event (e.g. the name of a corporate donor: Sen et al., ). Continuous measures can be constructed by coding free recall responses, or combining multiple dichotomous recall measures or correct-versus-incorrect ¹⁵ The “CSR” language in these examples is my own, as neither company uses that term.

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responses (e.g. matching CSR initiatives to the sponsoring banks; Pomering and Dolnicar, ). Measures of CSR awareness are particularly well-suited for research on stakeholder responses, such as studies in which CSR awareness is tested as a moderator of the effects of CSR perceptions and evaluations. CSR awareness can also be used as a predictor, mediator, or moderator in research on CSR evaluations (e.g. how different CSR evaluation constructs form, affect each other, and evolve over time), and in studies that incorporate different CSR communication strategies or information sources. Most researchers have used self-reported continuous measures of CSR awareness (e.g. Kim, ; Lee et al., ), which achieves greater predictive precision over the use of dichotomous measures (Chaudhary, ). To aid the interpretation of descriptive statistics, I urge researchers to be more transparent than they have been to date in describing the type and range of the response scales used (e.g. “dis/agreement” versus “how much”), and the wording of all response options including the mid-point of the scale.

Specificity and depth of CSR knowledge and awareness CSR knowledge and awareness can be measured in reference to CSR practices at varying levels of specificity, such as: (i) a single CSR episode or event (e.g. a company-sanctioned day of community service); (ii) a specific CSR program or initiative (e.g. an employee volunteerism program); (iii) a dimension of CSR that includes all applicable practices in the aggregate (e.g. all CSR activities performed to benefit the community); and (iv) a firm’s overall CSR engagement across all dimensions and activities. Researchers should measure CSR knowledge or awareness at a level of specificity commensurate with the stakeholders and context involved. Employees and consumers represent two ends of an internal–external stakeholder continuum, and job seekers fall somewhere in between. As internal stakeholders, employees are privy to “insider knowledge” and have access to more sources of CSR information, which gives researchers more latitude in measuring employees’ CSR awareness at different levels of specificity. Researchers who study any stakeholders with relatively high CSR awareness have an opportunity to examine other CSR perception constructs that likely shape CSR appraisals, such as perceptions of a company’s CSR commitment (i.e. the durability, amount, and duration of CSR inputs) and CSR impact (i.e. the outcomes produced by CSR inputs: Du et al., ). For most consumers, however, their CSR awareness might be largely informed by brief point-of-sale messages (e.g. a cause-related marketing campaign) and information about specific CSR events or initiatives (e.g. learning about a company’s “community action day” from a local news story, or about its ,+ hours of community service from a product label). Relative to consumers, job seekers likely have stronger motives to understand the CSR practices of an organization of which they might become a member, and are therefore more likely to seek information about a potential employer’s CSR via its website or during a job interview. I speculate that among most consumers, many job seekers, and a healthy proportion of employees, CSR awareness is likely confined to weakly informed impressions

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based on “snippets” of information about specific activities, and inference-based generalities about a company’s overall social and environmental responsibility. As a result, stakeholders with lower CSR awareness likely engage in heuristic-based CSR evaluations that are influenced by their beliefs about product quality, brand reputation, industry norms, and other matters (Peloza et al., ). For instance, if asked to evaluate a given company’s overall CSR, most consumers might rely on impressions of the company as a “good” or “bad” actor based on relatively little information (e.g. their products are located in the organic food aisle) or even tangential information (e.g. product quality). A smaller proportion of consumers might have more nuanced impressions (e.g. “This company definitely cares about its impact on the environment, and it probably treats its employees well”), and a relatively small portion might have meaningful dimension-specific CSR knowledge (e.g. “This company’s operations are carbon neutral, and they offered same-sex benefits to their employees long before it was fashionable”).

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.................................................................................................................................. The rapid growth in micro CSR research among employees, job seekers, and consumers has provided an increasingly nuanced understanding of how, why, and when they respond to their evaluations of an organization’s CSR practices. Considerably less is known about the CSR evaluations themselves, as researchers have only just begun to “scratch the surface” of the psychological complexity involved. CSR perceptions and appraisals do not form and exist in a vacuum. Some stakeholders will perceive and appraise new CSR information on a continual basis, and against a backdrop of their pre-existing CSR perceptions and appraisals. Almost nothing is known about how CSR evaluations evolve over time, and guide the subsequent processing of new information. Moreover, like all perceivers, stakeholders perceive and appraise CSR practices through their own prisms and filters that are defined by their personality traits, values, cultural context, attitudes, identities, beliefs, and expectations about the organization and its CSR practices. Clearly, there is a great deal that has yet to be studied and understood, which makes this an exciting time for micro CSR scholars. I hope the research that is reviewed herein, and the suggested directions for future studies that I have described, inform and inspire continued advancements in scholarship and practice grounded in the psychology of CSR.

A I thank Ante Glavas, Deborah E. Rupp, and David Waldman for their valuable comments and feedback on earlier drafts of this chapter.

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Garavan, T. N., Heraty, N., Rock, A., and Dalton, E. . Conceptualizing the behavioral barriers to CSR and CS in organizations: A typology of HRD interventions. Advances in Developing Human Resources, , –. Glavas, A. a. Corporate social responsibility and employee engagement: Enabling employees to employ more of their whole selves at work. Frontiers in Psychology, Organizational Psychology Specialty Section,  (Article ), –. Glavas, A. b. Corporate social responsibility and organizational psychology: An integrative review. Frontiers in Psychology, Organizational Psychology Specialty Section,  (Article ), –. Glavas, A., and Kelley, K. . The effects of perceived corporate social responsibility on employees. Business Ethics Quarterly, , –. Golob, U., Lah, M., and Jancic, Z. . Value orientations and consumer expectations of corporate social responsibility. Journal of Marketing Communications, (), –. Gond, J.-P., El Akremi, A., Swaen, V., and Babu, N. . The psychological microfoundations of corporate social responsibility: A person-centric systematic review. Journal of Organizational Behavior, , –. Groza, M. D., Pronschinske, M. R., and Walker, M. . Perceived organizational motives and consumer responses to proactive and reactive CSR. Journal of Business Ethics, , –. Hameed, I., Riaz, Z., Arain, G. A., and Farooq, O. . How do internal and external CSR affect employees’ organizational identification? A perspective from the group engagement model. Frontiers in Psychology, Organizational Psychology Specialty Section,  (Article ), –. Hansen, S. D., Dunford, B. B., Boss, A. D., Boss, R. W., and Angermeir, I. . Corporate social responsibility and the benefits of employee trust: A cross-disciplinary perspective. Journal of Business Ethics, , –. Hansen, S. D, Dunford, B. B., Alge, B. J., and Jackson, C. L. . Corporate social responsibility, ethical leadership, and trust propensity: A multi-experience model of perceived ethical climate. Journal of Business Ethics, (), –. Higgins, E. T., and Bargh, J. A. . Social cognition and social perception. Annual Review of Psychology, , –. Hillenbrand, C., Money, K., and Ghobadian, A. . Unpacking the mechanism by which corporate responsibility impacts stakeholder relationships. British Journal of Management, , –. Hui, I. K., Chan, A. H. S., and Pun, K. F. . A study of the environmental management system implementation practices. Journal of Cleaner Production, , –. Hur, W.-M., Moon, T.-W., and Ko, S.-H. . How employees’ perceptions of CSR increase employee creativity: Mediating mechanisms of compassion at work and intrinsic motivation. Journal of Business Ethics, (), –. Jones, D. A. . Widely assumed but thinly tested: Do employee volunteers’ self-reported skill improvements reflect the nature of their volunteering experience? Frontiers in Psychology, Organizational Psychology Specialty Section,  (Article ), –. Jones, D. A., and Rupp, D. E. . Social responsibility in and of organizations: The psychology of corporate social responsibility among organizational members. In N. Anderson, D. S. Ones, H. K. Sinangil, and C. Viswesvaran (eds), Handbook of Industrial, Work, and Organizational Psychology (nd ed.), –. Thousand Oaks, CA: Sage. Jones, D. A., and Willness, C. R. . Corporate social performance, organizational reputation, and recruitment. In K. Y. T. Yu and D. Cable (eds), The Oxford Handbook of Recruitment, –. New York: Oxford University Press.

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

Jones, D. A., Willness, C. R., and Madey, S. . Why are job seekers attracted by corporate social performance? Experimental and field tests of three signal-based mechanisms. Academy of Management Journal, , –. Jones, D. A., Willness, C. R., and Heller, K. W. . Illuminating the signals job seekers receive from an employer’s community involvement and environmental sustainability practices: Insights into why most job seekers are attracted, others are indifferent, and a few are repelled. Frontiers in Psychology, Organizational Psychology Specialty Section,  (Article ), –. Jones, D. A., Newman, A., Shao, R., and Cooke, F. L. . Advances in employee-focused micro-level research on corporate social responsibility: Situating new contributions within the current state of the literature. Journal of Business Ethics, (), –. Joo, Y. R., Moon, H. K., and Choi, B. K. . A moderated mediation model of CSR and organizational attractiveness among job applicants: Roles of perceived overall justice and attributed motives. Management Decision, (), –. Kim, A., Kim, Y., Han, K., Jackson, S. E., and Ployhart, R. E. a. Multilevel influences on voluntary workplace green behavior: Individual differences, leader behavior, and coworker advocacy. Journal of Management, (), –. Kim, H. L., Rhou, Y., Uysal, M., and Kwon, N. b. An examination of the links between corporate social responsibility (CSR) and its internal consequences. International Journal of Hospitality Management, , –. Kim, S. . The process model of corporate social responsibility (CSR) communication: CSR communication and its relationship with consumers’ CSR knowledge, trust, and corporate reputation perception. Journal of Business Ethics, (), –. Lee, E. M., Park, S., and Lee, H. J. . Employee perception of CSR activities: Its antecedents and consequences. Journal of Business Ethics, , –. Lee, S. Y., Zhang, W., and Abitbol, A. . What makes CSR communication lead to CSR participation? Testing the mediating effects of CSR associations, CSR credibility, and organization–public relationships. Journal of Business Ethics, (), –. Lin, C. P., and Liu, M. I. . Examining the effects of corporate social responsibility and ethical leadership on turnover intention. Personnel Review, (), –. Lin, C.-P., Chen, S.-C., Chiu, C.-K., and Lee, W.-Y. . Understanding purchase intention during product-harm crises: Moderating effects of perceived corporate ability and corporate social responsibility. Journal of Business Ethics, (), –. Luce, R. A., Barber, A. E., and Hillman, A. J. . Good deeds and misdeeds: A mediated model of the effect of corporate social performance on organizational attractiveness. Business and Society, , –. Luo, X., and Bhattacharya, C. B. . Corporate social responsibility, customer satisfaction, and market value. Journal of Marketing, (), –. Luo, X., and Bhattacharya, C. B. . The debate over doing good: Corporate social performance, strategic marketing levers, and firm-idiosyncratic risk. Journal of Marketing, , –. Madsen, H., and Ulhi, J. P. . Greening of human resources: Environmental awareness and training interests within the workforce. Industrial Management and Data Systems, , –. Mohr, L. A., and Webb, D. J. . The effects of corporate social responsibility and price on consumer responses. Journal of Consumer Affairs, (), –. Mohr, L. A., Webb, D. J., and Harris, K. E. . Do consumers expect companies to be socially responsible? The impact of corporate social responsibility on buying behavior. Journal of Consumer Affairs, , –.

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

 . 

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

Sen, S., Bhattacharya, C. B., and Korschun, D. . The role of corporate social responsibility in strengthening multiple stakeholder relationships: A field experiment. Journal of the Academy of Marketing Science, , –. Shen, J., and Zhang, H. . Socially responsible human resource management and employee support for external CSR: Roles of organizational CSR climate and perceived CSR directed toward employees. Journal of Business Ethics, (), –. Smith, S. M., and Alcorn, D. S. . Cause marketing: A new direction in the marketing of corporate responsibility. Journal of Consumer Marketing,  (Summer), –. Smith, V., and Langford, P. . Evaluating the impact of corporate social responsibility programs on consumers. Journal of Management and Organization, , –. Spanjol, J., Tam, L., and Tam, V. . Employer–employee congruence in environmental values: An exploration of effects on job satisfaction and creativity. Journal of Business Ethics, , –. Story, J., Castanheira, F., and Hartig, S. . Corporate social responsibility and organizational attractiveness: Implications for talent management. Social Responsibility Journal, (), –. Tian, Q., and Robertson, J. L. . How and when does perceived CSR affect employees’ engagement in voluntary pro-environmental behavior? Journal of Business Ethics, (), – Trope, Y., and Bassok, M. . Confirmatory and diagnosing strategies in information gathering. Journal of Personality and Social Psychology, , –. Turban, D. B., and Greening, D. W. . Corporate social performance and organizational attractiveness. Academy of Management Journal, , –. Vlachos, P. A., Panagopoulos, N. G., and Rapp, A. A. . Employee judgments of and behaviors toward corporate social responsibility: A multi-study investigation of direct, cascading, and moderating effects. Journal of Organizational Behavior, , –. Vlachos, P. A., Panagopoulos, N. G., Bachrach, D. G., and Morgeson, F. P. . The effects of managerial and employee attributions for corporate social responsibility initiatives. Journal of Organizational Behavior, (), –. Voliotis, S., Vlachos, P. A., and Epitropaki, O. . Perception-induced effects of corporate social irresponsibility (CSiR) for stereotypical and admired firms. Frontiers in Psychology, Organizational Psychology Specialty Section,  (Article ), –. Walker, M., Heere, B., Parent, M. M., and Drane, D. . Social responsibility and the Olympic Games: The mediating role of consumer attributions. Journal of Business Ethics, (), –. Webster, F. E., Jr. . Determining the characteristics of the socially conscious consumer. Journal of Consumer Research, , –. Wiernik, B. M., Dilchert, S., and Ones, D. S. . Age and employee green behaviors: A metaanalysis. Frontiers in Psychology, Organizational Psychology Specialty Section,  (Article ), –.

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  ......................................................................................................................

     Applying Best Practices from Humanitarian Aid to Evaluate Corporate Social Responsibility ......................................................................................................................

 ,  ,   

T I  F-P O  H P

.................................................................................................................................. C social responsibility (CSR) is of interest to a range of stakeholders because of its potentially positive impact on the financial performance of organizations (Aguinis and Glavas, ). We define CSR, in rough alignment with Aguinis (), as organizational actions and policies that address stakeholders’ expectations about the economic, social, and environmental performance of those organizations.¹ We assert that CSR should also be of growing interest, not only as a means to benefitting an organization’s financial performance, but also as a potentially powerful driver of social and environmental progress. We believe this to be the case because for-profit organizations are increasingly relevant to, and interested in, shaping social and environmental progress (see Aguilera et al., ).

¹ We excise from our definition of CSR any activities that are part of an organization’s legal obligations to stakeholders. This appears warranted given that CSR is commonly understood to be a set of discretionary, as opposed to mandatory, activities (Dahlsrud, ). Thus, for example, we would not classify an organization’s efforts to ensure safe working environments for its employees as a form of CSR because it is a necessary feature of its obligation to those employees under internationally recognized standards. These standards include but are not limited to those of the International Labour Organization’s  Decent Work Agenda (see ).

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    



For-profit organizations in our world today have unprecedented power and influence. The economic power of such organizations has grown steadily since the inception of their modern form in the nineteenth century (Banerjee, ). In , sixty-nine of the world’s top hundred economic entities were corporations—as opposed to states (Global Justice Now, ). Moreover, a relatively small number of transnational for-profit organizations exert considerable control over the global economy (Vitali et al., ). Indeed, according to some, power in the world is shifting from nation states to forprofit organizations so much that prominent corporations like those in Silicon Valley are becoming more powerful than the United States government (Khanna, ). Because of the interrelatedness of an organization’s financial, social, and environmental performance (Elkington, ; Porter and Kramer, ), the heightened financial power of for-profit organizations gives them important indirect control over social and environmental issues. Along with their rising financial power, for-profit organizations have taken an active role in attempting to directly influence social and environmental issues. For example, in response to the  withdrawal of the United States from the Paris Climate Accord on climate change, many multinational corporations pledged their continued commitment to the agreement (Tabuchi and Fountain, ). While the ultimate effects of such commitments are yet to be determined, those commitments are potentially relevant to environmental concerns given that just one hundred for-profit organizations in the world are responsible for more than  percent of global greenhouse gas emissions (Riley, ). As an example of for-profit organizations’ direct engagement with social issues,  employers including many prominent US corporations lobbied the US Supreme Court for same-sex marriage equality when the court considered the issue in  (Barrett, ). While the effect of such lobbying is again unclear, this behavior is a sign of for-profit organizations’ direct engagement with prominent social issues. Indeed, some credit the efforts of for-profit organizations with being partially responsible for widespread changes in social attitudes towards lesbian, gay, bisexual, and transgender issues by, for example, developing television shows that favorably depict such persons (Collins and Blake, ). The relevance of for-profit organizations to social and environmental issues has been recognized by the United Nations (UN). The UN has established a constituent body, known as the UN Global Compact,² to support organizations in the process of developing policies to uphold internationally recognized principles on human rights, labor, environment, and corruption, and to help those organizations act to help the world meet the UN’s set of overarching goals for human progress—the Sustainable Development Goals.³ As of , the UN Global Compact reports that , organizations have committed to transforming the world through principled business practices. The importance of for-profit organizations to human progress is also embedded in the UN’s Sustainable Development Goals themselves. For example, Goal  proposes that

² .

³ .

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

. , . ,  . 

partnerships with for-profit organizations are essential for achieving the sixteen other Sustainable Development Goals (United Nations, ). In summary, because of both the growing financial power of for-profit organizations and their willingness to directly engage with social and environmental issues, such organizations have an important influence on human progress and welfare. It is therefore curious that relatively little research has been conducted on CSR initiatives’ influence on their intended beneficiaries (Blowfield, ). Of specific relevance to the current chapter and handbook, there appears to be a dearth of research within the organizational and psychological sciences on CSR initiatives’ benefit to their intended beneficiaries (Carr, ). Indeed, accepting limited exceptions (e.g. Clarkson, ; Graafland et al., ; Jamali and Mirshak, ; Margolis and Walsh, ; Rupp et al., ; Wood, ), we agree with Rupp and Mallory (, ) who concluded that “with a decades-long emphasis on the social-financial performance link, the actual impact of CSR on intended targets has been all but abandoned to the shadows.”

W E CSR’ I   I B?

.................................................................................................................................. Determining the impact of CSR on its intended beneficiaries is important because the evaluations used for such determinations can help to ensure that CSR initiatives do not harm their beneficiaries, and instead result in maximal benefit. The avoidance of harm is an important concern because CSR beneficiaries are often vulnerable populations. The maximization of benefit is important because successful CSR initiatives are likely to have joint effects for the organization undertaking CSR and for society. We elaborate on the importance of evaluating CSR initiatives in greater depth in this chapter. Evaluating the impact of CSR is important, in part, because CSR initiatives can cause unintended harm to their intended beneficiaries. Due to the fact that CSR initiatives attempt to address social and environmental problems, they are likely to involve working with populations that are beleaguered by those problems. Such beleaguered, and therefore vulnerable, populations are largely at the mercy of relatively powerful for-profit organizations undertaking a CSR initiative because those intended beneficiaries might not possess the financial, social, or political resources to hold organizations accountable for their actions. If CSR initiatives were straightforward affairs with little chance of causing harm, such a lack of accountability might not be a prominent concern. However, history is littered with examples of well-intentioned powerful groups attempting to help less powerful groups, but instead creating sometime serious and lasting harm (Easterly, ). For example, the well-intentioned efforts of civilians who responded in the aftermath of the  earthquake in Haiti by arriving on the scene or by making donations of assorted goods often diverted needed resources and prevented effective

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    



recovery (Aleccia, ). As another example, a reforestation project undertaken jointly by a private organization and the Ugandan government meant to help combat climate change led to the displacement of local populations, widespread violence, and the destruction of important sources of livelihood (Grainger and Geary, ). Without evaluating the effectiveness of CSR initiatives, organizations and society might remain unaware of the unintended harms resulting from such efforts, and therefore be less likely to rectify such harm and prevent it from occurring in the future. Evaluating the impact of CSR is also important because such evaluation is a critical part of ensuring that CSR initiatives are of maximal benefit to their intended beneficiaries. The maximization of benefit from CSR initiatives not only assists beneficiaries but also helps to ensure that such efforts lead to the sustained creation of value in society—value that is likely to be shared by for-profit organizations undertaking CSR (Porter and Kramer, ). For example, Porter and Kramer () argue that CSR initiatives to promote employee wellness will benefit companies due to decreased absences and lost productivity. The successful creation of such shared value is likely to lead to additional CSR initiatives—creating a positive cycle of financial, social, and environmental performance. Evaluation of CSR initiatives also has the benefit of generating knowledge about the effects of such efforts. Such knowledge helps to improve future efforts and also encourages repeated participation in CSR. As discussed by Shadish et al. () the evaluation of programmatic efforts is of critical importance to ensuring the success of future efforts. In addition, knowledge of the results of CSR initiatives can also be valuable to intended beneficiaries who can use such information to help solve underlying and persistent problems. For example, if an organization’s CSR initiative attempts to benefit an underperforming school in an impoverished neighborhood, knowledge of the effectiveness of that effort could help the community in better addressing broader educational problems in the community. One-off CSR initiatives are unlikely to be optimally beneficial in addressing difficult social and environmental problems; instead, such difficult problems are likely to require sustained attention by repeated CSR initiatives because solutions to those problem often involve long-term processes like building trust, supporting empowerment, and changing social norms (Oxfam, ). Therefore, transmission of lessons learned from one CSR initiative to the next is critical to the long-term welfare of beneficiaries. In addition to improving future CSR initiatives, knowledge of CSR results stemming from an evaluation can also prompt repeated CSR participation. As highlighted by Grant’s () theoretical framework of employee volunteering, and in line with the work of Hackman and Oldham (), knowledge of positive results from participation in a CSR activity might drive repeated participation in such an activity by increasing motivation and satisfaction. Employees are often involved in CSR efforts, and enhanced employee motivation and satisfaction could generate repeated participation. In addition, the increased engagement, motivation, and satisfaction of employees involved with CSR initiatives could persuade other stakeholders (e.g. shareholders) of the utility of CSR.

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

. , . ,  . 

C  E  I  CSR I  I B

.................................................................................................................................. Accepting that it is important to evaluate whether CSR initiatives assist their intended beneficiaries, what are the proper criteria for such an evaluation? Stipulating specific criteria for the evaluation of CSR initiatives can be difficult given the wide variety of CSR goals and activities. Consider just a few examples from a single organization— Xerox. As part of its CSR initiatives, Xerox lawyers have provided pro bono work to not-for-profit organizations, Xerox employees have packed boxes for a holiday food drive, and the organization provided financial grants to teach young people to respect the environment (Xerox, , ). How might Xerox go about judging whether such efforts have benefitted those they were meant to help? While often different from one another, CSR initiatives focus on the provision of discretionary assistance to communities and organizations confronted with important social and environmental problems. Such assistance is closely akin to that involved in humanitarian aid and economic development efforts (herein referred to as humanitarian aid) undertaken by governments, not-for-profits, and intergovernmental institutions like the UN. Within the field of humanitarian aid, a set of five best-practice principles for effectively delivering aid have been developed as part of the Paris Declaration of Aid Effectiveness (herein the Paris Declaration; OECD, a). These principles are briefly described in Table .. The principles of the Paris Declaration were developed and ratified by over  countries, major not-for-profit organizations, and prominent intergovernmental institutions, drawing upon decades of experience from Table 3.1 Definitions of the Five Principles of the Paris Declaration on Aid Effectiveness Principle

Definition

Managing for results

The priority for both aid donors and partners to manage their activities according to measurable results.

Ownership

The priority for aid partners to exercise effective leadership over the policies, strategies, and actions meant to benefit them.

Alignment

The priority for donors of humanitarian aid to align their support to the goals and systems of aid partners.

Harmonization

The priority for various donors of humanitarian aid to ensure that their efforts are coordinated, transparent, and collectively effective.

Mutual accountability

The priority for both donors and partners of humanitarian aid to be jointly accountable to one another for the results of such aid.

Adapted from Organization for Economic Co-operation and Development, 2005a.

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    



the humanitarian aid community. These principles have helped to guide the evaluation of a wide array of humanitarian aid efforts including the provision of disaster relief assistance, programmatic efforts to help reduce the spread of diseases like HIV/AIDS, and the provision of block grants to accelerate economic development (OECD, ). We assert that the principles of the Paris Declaration are relevant to the evaluation of CSR initiatives for at least three reasons. First, the Paris Declaration principles have served as useful guides for evaluating a broad variety of discretionary efforts to address social and environmental issues around the world (Hyden, ). Second, the Paris Declaration principles represent lessons learned from a long history of mistakes in the humanitarian aid field—mistakes that those undertaking CSR initiatives can hope to avoid. Third, the Paris Declaration principles were jointly crafted and ratified by relatively powerful stakeholders who have traditionally provided humanitarian assistance (e.g. higher-income countries and intergovernmental institutions) and stakeholders that have instead tended to receive such assistance (e.g. lower-income countries). Consequently, these principles are likely to represent both the interests of stakeholders providing aid, herein referred to aid donors, and stakeholders receiving aid. Representing the interests of both of these stakeholder groups is important given the current imbalance in literature on CSR initiatives. This imbalance has favored the perspective of stakeholders involved in giving aid in the form of CSR initiatives and largely excluded the perspective of stakeholders receiving such aid (Rupp and Mallory, ). In the spirit of the Paris Declaration, stakeholders who are the intended beneficiaries of aid are not referred to as aid recipients, but instead as aid partners, to reflect the importance of such stakeholders taking an active and empowered role in the process of aid delivery. Next, we introduce the Paris Declaration principles and discuss how they might be operationalized in the context of CSR initiatives. We reflect such operationalization in a theoretical model. Figure . provides illustration of the model by depicting a CSR initiative that has successfully integrated the Paris Declaration principles into its processes. Throughout this discussion, we refer to stakeholders who are the intended beneficiaries of CSR initiatives as CSR partners and to the stakeholders that manage and/or undertake CSR initiatives (e.g. managers and/or employees) as CSR donors.

Managing for Results The first principle of the Paris Declaration is managing for results—that is, the priority for both aid donors and partners to manage their activities according to measurable results (OECD, a). Within the humanitarian aid field, this principle reflects the reality that the need for assistance outstrips available resources. Thus, choices about where to allocate scarce resources should be made according to evidence-based assessments of programmatic effectiveness (OECD, ). Such assessments are both formative and summative in nature—helping to inform ongoing and concluded efforts

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. , . ,  .  Process criteria

Outcome criteria Transparency and feedback to CSR partners

CSR partner goals & systems

Alignment

Mutual accountability

Outcome evaluation

CSR effort goals

Management for results

Empowerment Socio-structural empowerment (e.g., participative decision-making, skill development, access to resources)

Ownership



Psychological empowerment (e.g., a sense of meaning, self-determination, impact, and competence)

Harmonization Stakeholder analysis and superordinate goals

Benchmarking

Manifest outcomes (e.g., tangible measures of success including the number of houses built)

 . A CSR Initiative that has Integrated Paris Declaration Principles into its Processes

respectively. Standards for establishing whether a given aid or development effort is working have become more stringent, with calls for a greater reliance on randomized controlled trials (Duflo and Kramer, ). The need for rigorous evidence-based assessment of humanitarian aid work is largely a response to accusations that a great deal of, if not most, humanitarian aid efforts are ineffective—especially when addressing long-term and systemic issues (Easterly, ). Indeed, in a meta-analysis of studies of the effectiveness of humanitarian aid on reducing poverty, a key outcome of such work, no conclusive evidence was found that aid has had a statistically significant positive effect on economic growth (Doucouliagos and Paldam, ). In short, the principle of managing for results reflects the reality that attempts to help solve social and environmental problems are frequently unsuccessful. Because CSR initiatives aim to address many of the same social and environmental problems as actors in the humanitarian aid community, it is also likely that CSR initiatives are frequently unsuccessful in helping their beneficiaries. Determining whether this is the ccase will require appropriate methods of evaluation. Based on experience from the humanitarian aid community (see Bourguignon and Sundberg, ), at least three specific recommendations can be made regarding the nature of such evaluations—in particular, about the evaluation method used, the timing of evaluation, and the type of evaluation criteria.

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    



First, evaluations of CSR initiatives need to involve methods that are capable of ascertaining the causal effects of programmatic efforts. As discussed above, randomized controlled trials have proved important in evaluating the outcomes of humanitarian aid efforts and are considered the gold standard in evaluating the causal effects of programmatic efforts (Shadish et al., ). However, randomized controlled trials require assignment of subjects to both a treatment group and a control group. Assigning subjects to a control group within a CSR initiative might be either unethical or impractical. In lieu of randomized controlled trials, organizations (CSR donors) might consider using quasi-experimental designs or, barring that, interrupted time-series or regression discontinuity designs (Shadish et al., ). Second, the timing of the evaluation should be considered. That is, regardless of the evaluation method, and given the potential for CSR initiatives to cause harm to CSR partners, such evaluation should take place both formatively and summatively. That is, evaluations should take place during the course of the CSR initiative and following the completion of that CSR initiative. Formative evaluation is important in CSR initiatives given the potential for such efforts to unintentionally cause harm to beneficiaries. Important criteria for formative evaluation include the reactions and attitudes of CSR partners to the ongoing CSR initiative. In contrast, summative evaluation is important given the likelihood that a one-off CSR initiative will be unlikely to meaningfully address a social or environmental problem. Instead, addressing such a problem will require repeated efforts. Summative evaluations that prioritize evaluating distal outcomes including changes in knowledge and behaviors can help to ensure that future CSR initiatives are successful. Third, evaluation criteria should be considered. Whether or not an evaluation of a CSR initiative is formative or summative, given the tendency of such initiatives to address complex social issues, CSR evaluations will need to consider more than seemingly objective tangible outcomes. As discussed in the forthcoming sections, the effectiveness of CSR initiatives will rest both upon relatively straightforward programmatic outcomes (e.g. the number of houses built) but also more esoteric, subjective, and psychological concepts like beneficiary empowerment. Consequently, evaluation efforts need to adopt a post-positivist approach to evaluation that accounts for how social biases and power might shape determinations of a CSR initiative’s success (Pistrang and Barker, ). As a prominent example of how social biases and power might affect CSR initiative evaluation, consider the case of adaptive preferences. Disadvantaged populations are likely to exhibit adaptive preferences (Sen, )—that is, preferences that emerge from one’s disadvantaged position in society. For example, members of an impoverished population might rate their level of economic prosperity as high due to a lack of familiarity with the extent to which their economic opportunity is limited in comparison to others. Thus, relying on CSR partners to evaluate their own economic well-being might be misleading. Adopting a post-positivist approach to evaluation can help to account for the problem of adaptive preferences, and other problems in evaluation, by heightening awareness of social biases, privilege, and power.

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

. , . ,  . 

Ownership The second principle of the Paris Declaration is ownership, that is, the priority for aid partners to exercise effective leadership over the policies, strategies, and actions meant to benefit them (OECD, a). The principle of ownership was enshrined in the Paris Declaration because of the belief that humanitarian aid is most effective when it builds the capabilities of partners to take charge of their own welfare (OECD, ). Without the ownership of aid partners over humanitarian aid, efforts by aid donors have sometimes led to the dependency of partners on such assistance (Knack,; Thomas et al., ). This dependency can undermine the capabilities of partners to govern themselves and to address underlying systemic problems (Bräutigam and Knack, ). For example, the long-term provision of food aid by donors has been blamed for creating dependency in aid partners by undermining the capabilities and incentives of partners to grow and/or source such food themselves (Duffy, ). Because CSR initiatives aim to address social and environmental problems by providing assistance to local communities, there is the potential for such efforts to create similar forms of dependency. To operationalize the principle of ownership in a CSR context, we relate it to the concept of empowerment that has been widely studied in organizational contexts (Spreitzer, ). In line with Sen (), we define empowerment as the capabilities of individuals to live the sort of lives they value. We assert that CSR initiatives that uphold the principle of ownership will be those that tend to promote forms of empowerment among CSR partners. Empowerment can be understood as both a socio-structural and a psychological phenomenon (Spreitzer, ). From a socio-structural perspective, empowerment is the extent to which individuals hold important forms of power and resources, including participation in decisionmaking and access to financial resources (e.g. income) and human capital (e.g. education and skills). From a psychological perspective, empowerment can be understood as a sense of control over one’s life (Spreitzer, ). More specifically, psychological empowerment has been operationalized as a set of four beliefs: meaning—a sense that events in one’s life are aligned with one’s values; self-determination—a belief that one has a real choice in directing one’s life; impact—a belief that one is able to positively shape important life events and outcomes; and competence—a sense that one holds the capabilities necessary to accomplish important tasks. Socio-structural forms of empowerment tend to be necessary but not sufficient conditions for establishing psychological empowerment (Seibert et al., ). Moreover, true empowerment requires both socio-structural and psychological elements (Sen, ). That is, to be truly empowered, it is not enough to believe that one is in control; one needs the socio-structural power and resources to enact such control. Conversely,

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    



even if one possesses power and resources, without a sense of control, one is not truly empowered. Based upon the importance of the principle of ownership to the success of humanitarian aid efforts, we assert that CSR initiatives that are successful in benefitting CSR partners will be those that promote both the socio-structural and psychological empowerment of those partners. Even if a CSR initiative accomplishes its stated manifest goals by, for example, building a house, providing food, or delivering expert assistance to an organization or community, at least a portion of the success of such an effort is dependent on how the CSR initiative affects the socio-structural and psychological empowerment of CSR partners. This is not to say that empowerment and the manifest objectives are unrelated. Indeed, it is likely that successful tangible outcomes of a CSR initiative will often result from the enhanced empowerment of CSR partners. However, as evidenced by knowledge generated from within the humanitarian aid community, it is possible for donors to be superficially successful in assistance projects while at the same time undermining the capabilities of partners. While ownership is at first a seemingly vague concept to integrate into the evaluation of CSR initiatives, translating the principle to empowerment and decomposing it into both socio-structural and psychological empowerment helps to make the goal more attainable. It is possible to directly evaluate psychological empowerment via the use of appropriate self-report measures (e.g. Spreitzer, ). In addition, research has highlighted a variety of important socio-structural predictors of psychological empowerment (see Seibert et al., ) that might be assessed in the context of a CSR initiative. For example, organizations should systematically consider whether a CSR initiative should be undertaken in the first place, and what the broad goals of such an initiative should be. They should consider the resources currently (un) available to potential CSR partners, such as financial capital (e.g. income), social capital (e.g. social connections and a positive social reputation), and access to information (e. g. knowledge about how a CSR initiative was conducted), and whether the CSR initiative can contribute or has contributed to the development of such resources. When attempting to ascertain whether CSR partners developed skills due to a CSR initiative, a variety of markers of skill development are relevant (see Kraiger et al., ). Such markers include increased knowledge (e.g. facts and figures), changes in motivation (e.g. increased self-efficacy in performing a behavior), and more positive attitudes toward a behavior (e.g. acceptance of adaptive health behaviors). In addition, evaluations of skill development should include a consideration of whether those skills are enacted after the CSR initiative has ended and enacted in the CSR partners’ natural environment (see Salas et al., ).

Alignment The third principle of the Paris Declaration is alignment—that is, the priority for donors of humanitarian aid to align their support to the goals and systems of aid

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

. , . ,  . 

partners (OECD, a). The need to strive for alignment in humanitarian aid has been a hard-won lesson, as a lack of alignment has resulted in a variety of project failures and an undermining of aid partner capabilities (OECD, ). Indeed, alignment tends to be an important prerequisite for partners’ ownership over humanitarian aid efforts because a misalignment of goals and systems often precludes the participative decisionmaking that supports socio-structural empowerment and undermines the sense of meaning, self-determination, and impact that supports psychological empowerment. As an illustration of alignment in a humanitarian aid context, consider efforts by the donor country of Denmark to help the country of Bangladesh improve its water sanitation (Ministry of Foreign Affairs of Denmark, ). The choice of a water sanitation project is one way in which the priorities of the Danish government might have been misaligned with those of Bangladesh from the start of this aid project. Even though water sanitation is of importance to the welfare of any people, it might not have been the priority that various Bangladeshi stakeholders (e.g. national and local governments) chose to prioritize. In this specific case, however, improving water sanitation was indeed a priority of both the aid donor and partner. In fact, the Bangladeshi government had set specific goals and policies outlining how to proceed with the improvement of water sanitation—including choices about what regions to address first, how to finance sanitation projects, and what stakeholders should be involved in sanitation improvement. Despite these goals and policies, progress on the improvement of water sanitation in Bangladesh was lacking, in part due to bureaucratic hurdles and inefficient governance. Denmark had a choice of whether to sidestep Bangladeshi systems to more efficiently run water sanitation projects. Indeed, this is likely what would have happened in earlier decades when the priority of alignment was not as widely recognized. Instead, the Danish government avoided undermining local efforts and engaged directly with the Bangladeshi government to streamline water sanitation policies and procedures. While such a choice is, in a way, less satisfying for donors who are likely to value quick and tangible outcomes (e.g. the rapid construction of water sanitation systems), and in another way, more difficult because of the need to work within a different set of priorities and systems, it is the choice that tends to best support the long-term welfare of aid partners. Within the context of CSR initiatives, the goals and systems of CSR donors and CSR partners do not necessarily align well. That is, CSR initiatives may be more short-term in nature so as to accommodate easy integration alongside other stakeholder priorities (e.g. the priority for employees to maintain high levels of job performance while participating in an organization’s CSR initiative). In contrast, the goals of CSR partners may be more long-term. Furthermore, the goals of CSR donors may be related to the attainment of tangible outcomes that can be easily understood and represented in corporate reports (e.g. the number of hours volunteered). In contrast, the goals of CSR partners may be more nuanced. In terms of systems, CSR donors may be more likely to favor ways in which CSR initiatives can be carried out using existing available systems (e.g. a CSR initiative meant to train teachers to become computer literate might opt to

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    



use its own training approaches, tools, and facilities). While likely more convenient and efficient for the CSR donor, such a choice might undermine alignment. Potential negative consequences of such a lack of alignment in this specific case might include the difficulty experienced by teachers in adapting to learning new tools, the inability for such a training program to continue once the CSR initiative concludes, and the creation of conflict with existing indigenous training approaches. Because of the importance of alignment to the long-term welfare of CSR partners, a CSR initiative should be evaluated in part based on the extent to which it was aligned with the goals and systems of such partners. Unlike the principle of ownership, the principle of alignment is more of a process-related criterion than an outcome criterion because it concerns how a given CSR initiative was conducted. From a practical perspective, perhaps the best way to evaluate whether a CSR initiative upheld the principle of alignment is to assess how the goals and strategies of a CSR initiative were determined. If a CSR initiative’s goals and strategies were determined with specific insight from the goals and needs of CSR partners, alignment with those partners would be more likely. The optimal way to ensure that CSR partners’ goals and strategies are integrated into a CSR initiative is for the CSR donor to conduct a thorough needs analysis prior to the CSR initiative. Because of the need to promote socio-structural and psychological empowerment, which rest upon psychological and behavioral concepts like skill development and motivation, a useful template for successful CSR needs analysis is training needs analysis (Goldstein and Ford, ). A training needs analysis includes both a highly detailed focus on the needs of specific individuals and on broader contextual factors. One of the most important challenges in a CSR needs analysis is to determine who CSR partners actually are. For example, in a CSR initiative devoted to increasing the computer literacy of teachers, do the organizations and communities within which those teachers work and live also constitute CSR partners? Based upon the principle of harmonization (discussed in the next section), it is apparent that the definition of CSR partners should be highly broad and inclusive.

Harmonization The fourth principle of the Paris Declaration is harmonization—that is, the priority for various donors of humanitarian aid to ensure that their efforts are coordinated, transparent, and collectively effective (OECD, a). For any given social or environment problem, there is a complex web of interconnected stakeholders that must work to help solve it. Within the humanitarian aid community, a great deal of wasted resources have been attributed to stakeholders who either duplicate one another’s efforts or who work in ways that conflict with one another. While the principle of alignment prioritizes the coordination of efforts between aid donors and aid partners, the principle of harmonization tends to prioritize the coordination of efforts among aid donors. The lack of harmonization in humanitarian aid efforts is illustrated well by the

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

. , . ,  . 

case of Cameroon, which in  dealt with sixty different project management units and  project missions from only fourteen aid donors (Eyben, ). Such a profusion of project units and missions indicates a lack of coordination among aid donors that can lead to high transaction costs for aid partners and resource inefficiencies for aid donors. Prominent efforts toward harmonization have included Nordic donor countries coordinating with one another to, among other things, divide their labor in effective ways, providing information to one another, and agreeing to measure their efforts along standardized metrics (OECD, b). Within the context of CSR initiatives, it appears that a lack of harmonization might be similarly problematic. Because CSR initiatives are often sponsored by a single organization, and because many of them are short-term and periodic in nature, there is a high likelihood that efforts across organizations will not be meaningfully coordinated. Moreover, because a given CSR initiative is sometimes an opportunity for an organization to enhance its reputation (Aguinis and Glavas, ), there might be a natural disincentive to coordinate efforts with other organizations because such coordination might detract from the unique contributions of a single organization. However, the potential for threats to harmonization come not only from a lack of coordination among various CSR donors, but also from a lack of coordination with actors from other sectors (e.g. the public or not-for-profit sector) seeking to address a given social or environmental problem. Unless a CSR initiative is embedded in a sector within which the organization is already well enmeshed and integrated (e.g. an educational software organization attempting to help provide software to disadvantaged schools), the organization could be unaware of other similar initiatives in place, as well as relevant governmental or not-for-profit actors that could serve as effective collaborators. The extent to which a given CSR initiative is harmonized with related efforts stands to be an important determinant of its ultimate success in effectively benefitting CSR partners. The deleterious effects of a lack of harmonization might be difficult to directly evaluate—thus, evaluating whether a given CSR initiative was harmonized is perhaps best accomplished by determining whether that effort engaged in key best practices. Based upon best practices in humanitarian aid, we suggest that the goals of a CSR initiatives should be formed by conducting a stakeholder analysis. In addition, such goals should be formed by working back from superordinate goals and priorities from the humanitarian aid community. Finally, a CSR initiative should involve benchmarking with other related efforts. All three of these requirements are represented in Figure ., and we will briefly discuss each one in greater depth. Within the context of the humanitarian aid community, a stakeholder analysis is a process of systematically gathering and analyzing information regarding whose interests should be considered when developing or implementing a policy or program (Schmeer, ). Such an analysis should be conducted prior to solidifying a CSR initiative’s goals to ensure that such goals do not conflict in problematic ways with the goals of related stakeholders. The goals of CSR initiatives should also be informed by superordinate goals in the humanitarian aid arena. Perhaps the most generalizable set

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

of superordinate goals relevant to practically any CSR initiative is the United Nations Sustainable Development Goals. As already discussed, the Sustainable Development Goals are a broad set of international priorities that pertain to everything from ending poverty to protecting life below water (United Nations, ). However, each sustainable development goal provides a more detailed framework comprising more specific targets and metrics, known as indicators, by which to measure progress. For example, Sustainable Development Goal # is to end poverty in all its forms everywhere. This goal is composed of seven more detailed targets and twelve associated indicators of progress. An important aspect of harmonization is whether a CSR initiative’s goals are operationalized according to metrics that are used by other stakeholders. Thus, consulting the SDG helps to ensure that a given CSR initiative’s outcomes can understood by other stakeholders and compared to other relevant initiatives. Outside of referring to the Sustainable Development Goals, a useful way to support the harmonization of CSR initiatives with other related efforts is benchmarking. Benchmarking is a practice wherein organizations voluntarily share information regarding their activities with other relevant stakeholders. CSR-based benchmarking, that is, the sharing of information regarding the effectiveness of CSR initiatives, could help CSR donors to learn from past mistakes, to wisely choose CSR goals, and to identify relevant stakeholders (Graafland et al., ). In addition to organizations’ ongoing annual social and environmental reporting, a useful way for organizations to benchmark their CSR practices is by participating in the United Nations Global Compact. The Global Compact serves as a public repository for descriptions of CSR activities and as a vehicle to convene stakeholders that are engaging with specific social and environmental issues.

Mutual Accountability The fifth and final principle of the Paris Declaration is mutual accountability—that is, the priority for both donors and partners of humanitarian aid to be jointly accountable to one another for the results of such aid (OECD, a). The accountability of aid donors to aid partners for the outcome of aid efforts is certainly not guaranteed, given donors’ relatively greater power and the discretionary nature of humanitarian aid. However, the importance of such accountability is paramount given the potential for aid donors to inadvertently cause harm to aid partners. An egregious example of a lack of accountability of aid donors to aid partners is the case of the UN’s response to the devastating earthquake in Haiti in . It is alleged that the UN peacekeepers responding to this earthquake were infected with cholera and began an epidemic in Haiti that killed roughly , people (Gladstone, ), though it was approximately six years before the UN admitted that it played a role in that outbreak. The admission followed five years of denials and appears to have been prompted largely by pressure from outside stakeholders (Katz, ). Despite the importance of ensuring that aid donors are accountable to aid partners, the principle of mutual accountability

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

. , . ,  . 

also emphasizes the accountability of aid partners to aid donors. As claimed by the OECD (), this form of accountability is important as a mechanism to encourage aid partners to stick to declared plans and goals. The principle of mutual accountability presupposes the regular and thorough evaluation of aid efforts. However, it also includes an additional step—namely, the sharing of these results with CSR donors, CSR partners, and other relevant stakeholders. Other relevant stakeholders prominently include governmental, intergovernmental, and notfor-profit organizations that can provide oversight over humanitarian aid efforts (herein referred to as oversight bodies). The voluntary sharing of results with oversight bodies is important because humanitarian aid efforts frequently take place outside of the context of formal oversight by national or local governments due to their international and discretionary nature. Examples of oversight bodies for humanitarian aid efforts include national aid and development agencies (e.g. the United States Agency for International Development), multi-country institutions (e.g. the OECD), and issuebased advocacy organizations (e.g. Save the Children and Transparency International). Within a CSR context, an important aspect of a successful CSR initiative is likely to be whether the results of outcome evaluations are shared, not only with CSR partners, but also with relevant oversight bodies (e.g. those organizations that evaluate corporate social performance for use by institutional investors, e.g. MCSI⁴). The sharing of results with CSR partners and oversight bodies is important in CSR initiatives for multiple reasons. First, the sharing of results creates an expectation of accountability among both CSR donors and partners. Second, the sharing of results is a way to assist CSR partners’ understanding of their own needs and goals. The same oversight bodies that monitor humanitarian aid efforts also appear capable of providing oversight over CSR initiatives. Indeed, stakeholders in the humanitarian aid community have begun to assume oversight over CSR initiatives by studying their effects on beneficiaries (Blowfield, ). We note that if a CSR donor participates in benchmarking its CSR initiatives, an alternative way to support the principle of accountability would be for CSR donors to provide reciprocal oversight over one another’s CSR initiatives.

M T J G I

.................................................................................................................................. As is hopefully evident from the above discussion of the Paris Declaration’s five principles of aid effectiveness (OECD, a), ensuring that CSR initiatives benefit CSR partners involves far more than just good intentions. To further illustrate this point, consider the criteria that might be used to evaluate whether a CSR initiative benefitted its intended beneficiaries (also see Figure .). Prior to setting its CSR goals, an organization might review the Sustainable Development Goals and other relevant superordinate goals (e.g. national development goals and priorities) and conduct both a ⁴ .

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

stakeholder and needs analysis. Stakeholder and needs analyses should construe potential CSR partners broadly to include a variety of community stakeholders and related efforts. Other relevant organizations and entities can also be identified for the purposes of benchmarking. Once a CSR initiative’s goals are set, the organization can conduct an initial evaluation of stakeholders’ socio-structural and psychological empowerment as a comparison point for subsequent evaluations. When the effort is under way, formative evaluations of the extent to which the effort is meeting not only its tangible programmatic goals but also supporting the empowerment of CSR partners can be conducted. Finally, as the initiative concludes or evolves, summative evaluation can be completed and these results shared with related efforts, oversight bodies, and CSR partners. Such evaluations require integration of both quantitative and qualitative information from multiple sources.

Not All CSR Initiatives are Created Equal Research is needed not only to track the implementation of the model proposed in this chapter, but also how it might be received by organizations engaged in CSR. It is possible that the list of steps necessary to help ensure that CSR initiatives help their intended beneficiaries may seem onerous to organizations. That is, such efforts may be perceived of as technically difficult, time-consuming, and resource intensive. Further, evaluating CSR initiatives in this way may be more or less practical for organizations, depending on the characteristics of the initiatives themselves (Opoku-Dakwa et al., ). As illustrated in Figure ., CSR initiatives can be categorized along two dimensions: a dimension of proximity and a dimension of activity embeddedness. First, CSR initiatives can either be focused on proximal or distal stakeholders. Demarcating CSR initiatives involving more proximal stakeholders from CSR initiatives involving more distal stakeholders draws on distinctions between externally directed and internally

Proximal

Distal

Embedded

A construction organization providing housing to employees

A construction organization providing housing to recent immigrants

Peripheral

Activity embeddedness

Proximity of stakeholders

A construction organization providing literacy support to employees

A construction organization providing literacy support to recent immigrants

 . Dimensions of CSR Initiatives

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

. , . ,  . 

directed CSR initiatives (Jones and Rupp, ; Rupp and Mallory, ). Proximal stakeholders include employees, customers, the families of employees, or the local communities where the CSR donor conducts business. In contrast, distal stakeholders include organizations and communities with whom the organization has only indirect or tangential contact.⁵ Second, CSR initiatives can involve goals and activities that are embedded into an organization’s core competencies and existing processes (e.g. a telecommunications organization attempting to provide internet access to underserved populations) or they can involve goals and activities that are peripheral to these competencies and processes (e.g. a telecommunications organization undertaking a CSR initiative to plant trees; Aguinis and Glavas, ). Crossing these two dimensions suggests four differentiable forms of CSR: distal-peripheral, distal-embedded, proximalperipheral, and proximal-embedded. Examples of each of these different forms of CSR are provided in Figure .. Bifurcating the dimensions of embeddedness and proximity is an over-simplification of the complexity of CSR initiatives (see Jones and Rupp, ; Opoku-Dakwa et al., ; Rupp and Mallory, ). For example, a given CSR initiative might involve both proximal and distal stakeholders or a CSR donor might operate multiple interrelated CSR initiatives that are embedded and peripheral. However, this simple framework helps to illustrate a crucial point—namely that the characteristics of a CSR initiative relate to the ease with which an organization can help to ensure that its efforts abide by the Paris Declaration principles and thus maximize the chances of benefitting CSR recipients. In particular, we propose that, all else being equal, it will be easier for organization to ensure that CSR initiatives uphold the principles of alignment and harmonization when CSR initiatives are embedded versus peripheral (see also Aguinis and Glavas, ). Furthermore, we posit that it will be easier for organizations to uphold the principles of ownership, mutual accountability, and managing for results when CSR partners constitute proximal versus distal stakeholders. The principles of alignment and harmonization jointly emphasize the need for organizations to base the goals of CSR initiatives on the existing needs and priorities of CSR beneficiaries (OECD, a). For-profit organizations that sponsor CSR initiatives hold a variety of competencies, that is, mixtures of resources and skills that allow organizations to accomplish their goals. The set of competencies that characterize an organization’s central purpose and provide it a competitive advantage are known as its core competencies (Prahalad and Hamel, ). Holding a core competency in a particular product or service is likely to be associated with heightened expertise in that product or service, intimate knowledge of stakeholders in relevant industries and markets, and a pre-existing efficiency in production or service delivery. Such expertise, knowledge, and efficiency can be applied to CSR initiatives if such efforts are related to the organization’s core competencies. In particular, if the needs or goals of a CSR partner are related to an organization’s core competencies, an organization can apply ⁵ We assert that because of the global interconnectedness of financial, social, and environmental dynamics, virtually all organizations and communities can be considered as at least distal stakeholders.

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

its expertise to better understand that partner’s goals. For example, if a for-profit transportation organization is engaged in a CSR initiative to provide transportation solutions to a rural indigenous tribe, it will be more adept at understanding that tribe’s goals and needs because of the organization’s experience in providing transportation solutions to its clients. In addition, if relevant stakeholders for a particular CSR initiative are in an industry, sector, or region relevant to its core competencies, an organization will more easily be able to conduct a stakeholder analysis and identify other organizations for benchmarking. Moreover, it is likely that the organization will be well-versed in relevant superordinate goals. For example, the transportation organization just mentioned is likely to be familiar with governmental transportation priorities and related transportation projects in rural areas. The principles of managing for results, ownership, and mutual accountability all assume a close working relationship between CSR donors (organizations) and CSR partners (beneficiaries). For example, the principles of managing for results and ownership require organizations to involve intended beneficiaries in the development of CSR initiatives and to understand the range of factors that might affect their psychological empowerment. Because of this, we argue that CSR initiatives that involve proximal stakeholders are better suited to upholding these principles. For example, from the perspective of an organization, it may seem easier to measure the psychological empowerment of employees as compared to community members because the organization has easy and prolonged access to the attention and time of employees. Moreover, organizations are likely to be more familiar with the range of factors that influence employees’ sense of control over their environments. Regarding the principle of alignment, because it requires organizations to understand and integrate their efforts with the systems and processes of CSR partners/ beneficiaries, upholding alignment might also be perceived by organization as easier when CSR initiatives involve proximal stakeholders. For example, if an organization has its own customers as a CSR partner, its lines of product distribution already form part of its partner’s processes and systems. Finally, we expect that CSR initiatives involving proximal stakeholders are also better suited to upholding the principle of mutual accountability. Proximal stakeholders are expected to be more likely to hold forms of leverage over an organization that could be exerted if CSR initiatives are ineffective or harmful. For example, if a CSR initiative targets customers or the family members of its employees, these stakeholders could exert economic or social pressure on the organization to hold it accountable for its actions or omissions in the context of a CSR initiative.

C

.................................................................................................................................. Because of the prominence of for-profit organizations in the world today, CSR is potentially an important tool to address serious social and environmental issues.

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

. , . ,  . 

However, just as in the humanitarian aid community, CSR can also cause unintended harm (see Willness, this volume). Thus, evaluating the impact of CSR on its intended beneficiaries is essential. Problematically though, research on evaluating CSR projects is limited (Margolis and Walsh, ; Rupp and Mallory, ). While designing CSR initiatives to be effective, and evaluating them to ensure such effectiveness are likely to be difficult tasks, useful guides for such tasks are provided by the principles of managing for results, ownership, alignment, harmonization, and mutual accountability. Broadly speaking, these principles reflect the importance for the intended beneficiaries of CSR initiatives to be more than just passive recipients of aid, and instead to be empowered partners. Moreover, these principles emphasize that the organization undertaking a CSR initiative cannot concentrate solely on isolated programmatic outcomes, but must proactively integrate a CSR initiative’s processes and priorities with those of the broad range of stakeholders that is inevitably involved in helping to solve a given social or environmental problem. The steps required to uphold the Paris Declaration principles in CSR initiatives help to highlight that not all types of CSR initiatives are equally suited to benefitting their intended beneficiaries. An important conclusion from the present discussion is that CSR initiatives that involve proximal stakeholders (e.g. employees or customers) and that involve the organization’s core competencies are, all things being equal, more likely to lead to positive impact on their intended beneficiaries because they appear better suited to upholding the Paris Declaration principles. Thus, while an organization might endeavor to undertake a CSR initiative involving activities unrelated to its core competencies and targeting CSR partners with whom it is unfamiliar, the burden of ensuring that such an effort successfully benefits its intended beneficiaries will be heavier. Nevertheless, and regardless of the difficulty of ensuring a positive impact of CSR initiatives on intended beneficiaries, decades of experience in humanitarian aid clearly communicate that good intentions are not enough to ensure that such initiatives help, as opposed to harm, vulnerable populations.

R Aguilera, R. V., Rupp, D. E., Williams, C. A., and Ganapathi, J. . Putting the S back in corporate social responsibility: A multilevel theory of social change in organizations. Academy of Management Review, (), –. Aguinis, H. . Organizational responsibility: Doing good and doing well. APA Handbook of Industrial and Organizational Psychology, iii. Maintaining, Expanding, and Contracting the Organization, –. Washington, DC: American Psychological Association. Aguinis, H., and Glavas, A. . What we know and don’t know about corporate social responsibility: A review and research agenda. Journal of Management, (), –. Aguinis, H., and Glavas, A. . Embedded versus peripheral corporate social responsibility: Psychological foundations. Industrial and Organizational Psychology, (), –. Aleccia, J. . Disaster do-gooders can actually hinder help. NCB News, Jan. . .

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

. , . ,  . 

Jamali, D., and Mirshak, R. . Corporate social responsibility (CSR): Theory and practice in a developing country context. Journal of Business Ethics, (), –. Jones, D. and Rupp, D. . Social responsibility in and of organizations: The psychology of corporate social responsibility among organizational members. In D. S. Ones, N. Anderson, and H. K. Sinangil (eds), The SAGE Handbook of Industrial, Work and Organizational Psychology, –. Thousand Oaks, CA: Sage. Katz, J. M. . UN admits role in cholera epidemic in Haiti. New York Times, Aug. . . Khanna, P. . These  companies are more powerful than many countries. . Knack, S. . Aid Dependence and the Quality of Governance: Cross-Country Empirical Tests. Policy Research Working Paper . Washngton, DC: World Bank. . Kraiger, K., Ford, J. K., and Salas, E. . Application of cognitive, skill-based, and affective theories of learning outcomes to new methods of training evaluation. Journal of Applied Psychology, (), –. Margolis, J. D., and Walsh, J. P. . Misery loves companies: Rethinking social initiatives by business. Administrative Science Quarterly, (), –. Ministry of Foreign Affairs of Denmark. . Harmonisation and Alignment in Water Sector Programmes and Initiatives (Good practice paper). Copenhagen: Ministry of Foreign Affairs. . Opoku-Dakwa, A., Chen, C. C., and Rupp, D. E. . CSR initiative characteristics and employee engagement: An impact-based perspective. Journal of Organizational Behavior, (), –. Organization for Economic Co-operation and Development. a. The Paris Declaration on Aid Effectiveness: Ownership, Harmonization, Alignment, Results, and Mutual Accountability (High Level Forum Report). Paris: OECD. . Organization for Economic Co-operation and Development. b. Harmonisation, Alignment, Results: Report on Progress, Challenges, and Opportunities. Paris: OECD. . Organization for Economic Co-operation and Development. . Better Aid: Aid Effectiveness— a Progress Report on Implementing the Paris Declaration. Paris: OECD. . Oxfam. . Ownership in Practice: The Key to Smart Development. . Pistrang, N., and Barker, C. . Varieties of qualitative research: A pragmatic approach to selecting methods. In H. Cooper, P. M. Camic, D. L. Long, A. T. Panter, D. Rindskopf, and K. J. Sher (eds), APA Handbook of Research Methods in Psychology, ii. Research Designs: Quantitative, Qualitative, Neuropsychological, and Biological, –. Washington, DC: American Psychological Association. Porter, M., and Kramer, M. R. . Creating shared value. Harvard Business Review, (/), –. Prahalad, C. K., and Hamel, G. . The core competence of the corporation. Harvard Business Review, (), –. Riley, T. . Just  companies responsible for % of global emissions, study says. Guardian, July . Retrieved from . Rupp, D. E., and Mallory, D. B. . Corporate social responsibility: Psychological, personcentric, and progressing. Annual Review of Organizational Psychology and Organizational Behavior, (), –.

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    



Rupp, D. E., Skarlicki, D., and Shao, R. . The psychology of corporate social responsibility and humanitarian work: A person-centric perspective. Industrial and Organizational Psychology: Perspectives on Science and Practice, (), –. Salas, E., Tannenbaum, S. I., Kraiger, K., and Smith-Jentsch, K. A. . The science of training and development in organizations: What matters in practice. Psychological Science in the Public Interest, (), –. Schmeer, K. . Stakeholder analysis guidelines (World Health Organization policy toolkit). . Seibert, S. E., Wang, G., and Courtright, S. H. . Antecedents and consequences of psychological and team empowerment in organizations: A meta-analytic review. Journal of Applied Psychology, (), –. Sen, A. . Development as Freedom. New York: Oxford University Press. Shadish, W. R., Cook, T. D., and Campbell, D. T. . Experimental and Quasi-Experimental Designs for Generalized Causal Inference. Boston: Cengage. Shadish, W. R., Cook, T. D., and Leviton, L. C. . Foundations of Program Evaluation: Theories of Practice. London: Sage. Spreitzer, G. M. . Psychological empowerment in the workplace: Dimensions, measurement, and validation. Academy of Management Journal, (), –. Spreitzer, G. M. . Taking stock: A review of more than twenty years of research on empowerment at work. In J. Barling and C. L. Cooper (eds.), The SAGE Handbook of Organizational Behavior, i. –. London: Sage. Tabuchi, H. and Fountain, H. . Bucking Trump, these cities, states and companies commit to Paris Accord. New York Times, June . . Thomas, A., Viciani, L., Tench, J., Sharpe, R., Hall, M., Martin, M., and Watts, R. . Real aid: Ending aid dependency. . United Nations. . Sustainable development goals. . Vitali, S., Glattfelder, J. B., and Battiston, S. . The network of global corporate control. PloS One, (). Wood, D. . Corporate social performance revisited. Academy of Management Review, (), –. Xerox. . Global Citizenship Report—. Norwalk, CT: Xerox.. Xerox. . Global Citizenship Report—. Norwalk, CT: Xerox..

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  ......................................................................................................................

      ......................................................................................................................

 -   . 

W corporate social responsibility (CSR) has been shown to influence employee attitudes towards employers, its effect on meaningful work is only now being suggested (Aguinis and Glavas, ; Gond et al., ). In this chapter, we explore several ways in which CSR can shape employees’ experience of meaningful work. We begin with a discussion of meaningful work—what it is, and why it matters for employees and organizations. In doing so, we distinguish four types of positive meaning in work; specifically, the intrinsic, extrinsic, service, and kinship value of work. We then describe four facets of CSR that we suggest have distinct influences on the experience of meaningful work: () stakeholders’ expectations regarding business’s socio-environmental responsibilities (CSR expectations); () stakeholders’ assessments of corporate socioenvironmental performance (CSR assessments); () stakeholders’ attributions regarding the character of the firm and its members (CSR attributions); and () organizational responses to stakeholders’ expectations, assessments, and attributions of responsibility (CSR responses). We explain how these facets of CSR affect the positive meaning of work, and conclude by discussing implications for research and practice. Our discussion highlights how CSR places demands on employees that can be meaningful, provided that employees believe that they and their organizations can live up to those demands.

T E  M W

.................................................................................................................................. Meaningful work can be simultaneously thought of as an assessment of one’s job as rewarding, as well as the accompanying “feeling that one is receiving a return on investment” from one’s work (Kahn, , ). Work motivation researchers have

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   



assigned meaningful work a central role in promoting employee job satisfaction, performance, and well-being (Arnold et al., ; Behson et al., ; Deci et al., ; Hackman and Oldham, ; Humphrey et al., ; May et al., ). Philosophers have also argued that society has a moral obligation to provide citizens with meaningful work that engenders moral and technical excellence, and that is of value to the broader community (Beadle and Knight, ; Michaelson et al., ); while sociologists have been concerned that industrialization and the division of labor reduces the meaningfulness of work and leads to the alienation of workers (Seeman, ). Thus, meaningful work is not only of economic importance (through its implications for firm performance and employee well-being); it also has broader moral and social implications. In the following section, we describe four types of positive meaning that have been associated with work. Subsequently, we discuss how CSR influences meaningful work by shaping employees’ perceptions of these types of positive meaning in their work.

Workplace Antecedents of Meaningful Work Prior research has identified several types of positive meaning in work, which we categorize here as the: () intrinsic, () extrinsic, () service, and () kinship value of work. The intrinsic value of work arises from task characteristics (e.g. autonomy, task complexity, and job-related feedback) that lead employees to experience feelings of enjoyment, self-development, and achievement while working (Deci et al., ; Dysvik and Kuvaas, ; Eisenberger and Cameron, ; Eisen et al., ; Hackman and Oldham, ; Ros et al., ; Ryan and Deci, ). An example of this would be the pleasure that a musician derives from mastering his or her craft through practice, and from performing in front of an appreciative audience. In contrast, the extrinsic value of work arises not from the task itself but from related benefits of the work that have social and economic value for the employee. These include pay (that facilitates financial security and pursuit of other personal goals), as well as social benefits related to status, influence, power, and the opportunity to be a role model for others (Colby et al., ; Srivastava et al., ).¹ ¹ The intrinsic vs. extrinsic distinction, which is concerned with the extent to which motivation is self-sustained vs. dependent on external stimuli, is tenuous. E.g. Shamir () notes that work motivation theories incorrectly assume that intrinsic motivation stems from the pleasure of the activity itself, rather than from results; and Bandura () notes the difficulty in distinguishing direct and indirect outcomes of an action. Acknowledging this, we nevertheless use the term intrinsic to focus on benefits to the self arising from the content of work tasks, and the term extrinsic to focus on benefits of work that are unrelated to the specific task. This distinction has implications for whether employees seek certain work content (e.g. teaching) with less regard for the context of the work (e.g. pay, power, status), or seek a certain context with less regard for the specific content of work (Wrzesniewski et al., ). That said, we do not imply that extrinsic benefits of work are associated with a lack of autonomy (Eisenberger and Cameron, ).

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

 -   . 

The service value of work arises not because of the extrinsic benefits of the work to the employee, and not because of enjoyment of work tasks per se, but rather from the positive impacts of the work on the well-being of others (e.g. co-workers, customers, the general public). Thus, employees can find service value in tasks that are not particularly pleasant and that provide few extrinsic benefits (Chiappetta-Swanson, ). In the meaningful work literature, some have referred to service value in terms of “doing good” (Pratt et al., ), contributing to the “greater good” (Steger et al., ), and “serving others” (Lips-Wiersma and Morris, ). In job design research, this type of meaningfulness is reflected in the concept of task significance (Hackman and Oldham, ). In research on visionary leadership and missionoriented companies (e.g. Procter & Gamble and Patagonia²), it is reflected in discussions of self-transcendence (Arnold et al., ; Grant, ; Piccolo and Colquitt, ; Waldman et al., ). Finally, the kinship value of work arises from the value employees find in workplace relationships and membership (Pratt et al., ; Ros et al., ). Such value can be derived from friendships with specific individuals at work, or from psychological attachment to an organization or occupation (Bunderson and Thompson, ; O’Reilly and Chatman, ; Rousseau, ; Sluss and Ashforth, ). Thus, even if employees do not find their work particularly impactful, enjoyable, or otherwise rewarding, they may derive meaning from social relationships enabled through work. In subsequent sections, we discuss how CSR influences the intrinsic, service, and kinship value of work. In doing so, we make a few assumptions. First, we assume that these types of positive value in work can contribute independently and additively to the overall experience of meaningful work. This is consistent with the literature. For example, some have suggested that the intrinsic, extrinsic, service, and kinship benefits of work may each satisfy different human needs (e.g. needs for growth, control, meaningful existence, and belongingness respectively; Aguilera et al., ; Cardador and Rupp, ; Hackman and Oldham, ). Prior research also shows that individuals can find meaning in their work as a craft, a form of service, a source of financial security, a means of self-actualization, or a calling (Bellah et al., ; Pratt et al., ; Wrzesniewski et al., ). We also assume that workers can derive more than one form of meaning from their work. In particular, it is feasible that those who find intrinsic, extrinsic, or service value in their work, would develop a sense of kinship with other workers who share similar values and experiences (e.g. medical residents; Anteby et al., ; Ashmore et al., ; Creed et al., ; Pratt et al., ). Finally, we note that individuals can differ, based on their personal goals and preferences, in the degree to which they find intrinsic, extrinsic, service, and kinship benefits of work meaningful. Acknowledging this, we explain throughout the remainder of this chapter how CSR can increase or reduce ² Patagonia’s mission includes implementing solutions to the environmental crisis , and Procter & Gamble’s focuses on improving the lives of consumers .

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   



opportunities for positive meaning, which is expected to exert a main effect on employees’ experience of meaningful work. In the following sections, we introduce four facets of CSR and discuss how they influence the experience of meaningful work primarily through their effects on the intrinsic, service, and kinship value of work.

H C S R A M W

.................................................................................................................................. To discuss the effects of CSR on meaningful work, we first clarify what we mean by the “corporation”³ and its social responsibilities. First, we adopt the stakeholder view of the firm as a legal entity in which any party with a “risk” (financial or otherwise) is considered as a legitimate stakeholder (Alchian and Demsetz, ; Jensen and Meckling, ; Mitchell et al., ). Thus, we use the term stakeholder to include shareholders, managers, employees, customers, government, the community, and any other parties that have a share or interest in the undertakings of the firm (Freeman, ). Second, consistent with research showing that the term CSR is used to refer to several different organizational phenomena (Dahlsrud, ; Okoye, ), we suggest that CSR is multi-faceted. In the following sections, we therefore introduce four facets of CSR—CSR expectations, assessments, attributions, and responses—that are distinct but together describe the phenomenon of CSR as it relates to employees’ experience of meaningful work. We explain how each of these facets influences the experience of meaningful work by enabling or constraining opportunities for employees to find intrinsic, service, and kinship value in their work. We subsequently propose boundary conditions on these effects. These relationships are illustrated in Figure ..

CSR Expectations CSR expectations are the legal, ethical, and philanthropic expectations that stakeholders have of corporations (Carroll, ). They include expectations about what constitutes: () acceptable motivations of organizational members; () acceptable outcomes of organizational activity; and () acceptable means through which those outcomes are achieved (Mitnick, ). CSR expectations are not static, but rather are negotiated among stakeholders on an ongoing basis (Castelló et al., ; Parmar et al., ; ³ We recognize the looseness in which the “corporate” of corporate social responsibility has been used within the CSR literature, in that many organizations beyond those that would be classified formally as corporations also regularly institute “CSR” initiatives. These include public sector (e.g. government) organizations, as well as not-for-profit firms. Although some writers have advocated for the more general term “organizational responsibility” (e.g. Aguinis, ), we adopt the more recognized CSR label.

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

 -   . 

Individual-Level Boundary Conditions P5a

P5b

Agreement with Stakeholders

P6 P7a

Perceived Control over Harms and Benefits

P7b

Identification with the Target of CSR Attributions

P8 P9

Perceived Personal Growth through CSR Involvement

Sources of Positive Meaning in Work

Facets of CSR CSR Expectations (Exposure)

P1

CSR Assessments (Conclusiveness)

P2

CSR Attributions (Pervasiveness)

P3

CSR Responses (Employee Involvement)

P4

Service Value of Work (Impact of the Work on Others)

Kinship Value of Work (Valued Relationships and Memberships Enabled through Work)

Experience of Meaningful Work

Intrinsic Value of Work (Developing Competence, Relatedness, Autonomy through Work)

 . The Effects of CSR on the Experience of Meaningful Work

Scherer and Palazzo, ). We suggest that CSR expectations are positively associated with the experience of meaningful work because exposure to them increases employees’ understanding of the potential for service through their work. Employees are exposed to CSR expectations in the course of their work. For example, CSR expectations can be communicated in workplace training programs and via performance goals that highlight specific stakeholder expectations; through informal conversations at work; as well as through formal organizational communications such as posters, emails, memos, and company reports. CSR expectations can also be communicated by external sources such as the media and regulators, and employees can be exposed to CSR expectations through direct interactions with stakeholders. For example, executives learn about shareholders’ expectations through interactions with shareholders; sales representatives learn about customers’ expectations through their interactions with them; and sales representatives and executives might inform each other about customer and shareholder expectations, respectively. Through these mechanisms, some stakeholders may have greater means to expose employees to their expectations. For example, shareholders may have greater power to determine which CSR expectations are communicated through training programs and performance management; and some media outlets may have greater power to expose CSR expectations through their coverage. Exposure to CSR expectations would also increase when multiple stakeholders share the same expectations. For example, if both

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   



shareholders and customers share certain expectations, then executives and sales representatives would both be exposed to those expectations to a greater degree. In particular, CSR expectations about which there is high consensus among stakeholders may come to represent institutionalized beliefs about what represents legitimate business conduct (Bitektine and Haack, ), and employees may be highly exposed to such institutionalized beliefs even if they are not consciously aware of it (Campbell, ; Lounsbury, ; Marquis and Davis, ; Matten and Moon, ). For example, prior studies provide evidence that exposure to ideologies reifying selfinterest and shareholder profit maximization (e.g. through business education or at work) leads people to behave more selfishly (Giacalone and Promislo, ; Molinsky et al., ; Wang et al., ). When exposed to such expectations, even those who do not personally agree with those expectations may believe that they are expected to comply with them in the workplace (Beggs and Lane, ). There is also some evidence that such beliefs, internalized through educational, life, and work experiences, shape workplace behavior by changing intrinsic brain functioning (Waldman et al., ). We suggest that, through exposure to CSR expectations, employees learn how their work can benefit or harm stakeholders, and which workplace activities and outcomes are most valued by stakeholders (Galaskiewicz, ; Grant, ; Grant et al., ; Griffin et al., ; Hewstone, ; Maitlis, ; Salancik and Pfeffer, ). We expect this knowledge to, in turn, be positively associated with the experience of meaningful work through service. This occurs because, when workers become aware of the potential harms and benefits of their work, they can find meaning in performing that work with appropriate care and sensitivity—that is, in performing the work responsibly (see e.g. Bolton et al., ; Chiappetta-Swanson, ; Margolis et al., ; Margolis et al., ; Molinsky and Margolis, ). Thus, exposure to CSR expectations is expected to enable meaningfulness through the service value of work. This effect is illustrated in a study by Dutton and Dukerich (, ). They describe how the Port Authority of New York and New Jersey was initially reluctant to take on any responsibility for dealing with the issue of homelessness at its facilities. However, as public criticism of the organization’s stance increased, the organization’s perception of its social responsibility towards the homeless changed, as illustrated in the following quote from an informant: You know, we just didn’t know what to do, you know, when you get  degree temperatures at night, and there’s absolutely no place for them to go. And so, we said, well, how are we in good conscience going to throw them out of this facility? . . . And this was the first time that people really began to look at it and say, “Wait a minute, you know, this is a real moral issue.” And this was when we decided to make the commitment. And while Grand Central and every place else was throwing them out, we weren’t.

This quote illustrates how employees’ understanding of potential harms and benefits of their workplace behavior and performance was increased through exposure to

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

 -   . 

stakeholders’ expectations. In this case, employees were exposed to CSR expectations through public debate and media coverage, and later through internal discussion within the organization (e.g. Port Authority departments eventually had to include in their budgets the costs of dealing with homelessness). This illustrates how some CSR expectations can objectively receive greater exposure than others. Subsequently, employees’ increased understanding of the potential harms and benefits associated with homelessness at Port Authority facilities allowed them to discover new opportunities for service in their work—specifically, through addressing the issue of homelessness. Consequently, we propose: Proposition : Exposure to CSR expectations is positively associated with the experience of meaningful work (via the service value of work).

CSR Assessments CSR assessments involve evaluation of an organization’s behavior and performance, resulting in a judgment that the behavior/performance meets or does not meet stakeholders’ expectations. For example, CSR ratings such as those of Kinder Lydenburg Domini Analytics, Inc. and the Dow Jones Sustainability Index⁴ reflect an evaluation of the organization’s performance, and a judgment of the degree to which the organization’s activities meet stakeholders’ expectations (Chatterji and Toffel, ; Mattingly and Berman, ). Thus, whereas CSR expectations are forward-looking and concerned with how organizations should act, CSR assessments are backwardlooking evaluations by stakeholders of how firms actually acted. The evaluative part of CSR assessment entails the measurement of corporate socioenvironmental performance, which remains a major challenge for practitioners and researchers (Mitnick, ; Wood, ). Organizations and their partners are responding to this challenge through a variety of approaches to standard-setting and reporting (Márquez and Fombrun, ; Waddock, ). For example, the Global Reporting Initiative (GRI) promotes organizational reporting of social and environmental investments and outcomes.⁵ The International Organization for Standardization (ISO) has developed over , international standards in areas such as product and worker safety, information security, and environmental management that corporations can adopt.⁶ ISO partners with third-party organizations to certify corporate operations based on their compliance with these standards. Both the process of evaluation involved in CSR assessments and the subsequent judgments of stakeholders can promote the experience of meaningful work through the feedback it provides to organizational members. For example, in its first attempt at ⁴ . For a more expansive and international list of indices, see Márquez and Fombrun (). ⁵ . ⁶ .

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

triple-bottom-line reporting (i.e. reporting on financial, social, and environmental performance), British Petroleum (BP) Australia reported on both positive and negative outcomes (e.g. investments in employees and the community, as well as oil spills, safety incidents, and inner-city pollution), acknowledging its social responsibility vulnerabilities, stating: We are reporting this way because the overwhelming response from our stakeholders is that they want more transparency from companies. For us though, it is not the reports per se that are important but the behaviours that they engender. To be able to report externally and internally about what we have done in the past year, requires us to look transparently at all of our activities. We need to be able to look at what has been done well and at our shortfalls. For a performance company like ours, none of us like underperformance and so we act. We act so as to improve the future results. (BP, , )

This quotation illustrates how the process of CSR assessment potentially communicates both bad news (in the form of quantification of the harm caused by corporate activity) and good news (in the form of highlighting past successes and future opportunities for improvement) to employees about socio-environmental performance. Prior research suggests that both positive and negative feedback is valuable to employees if the feedback is of high quality (i.e. accurate, reliable, comprehensive, and specific; Locke and Latham, ; Steelman and Rutkowski, ). This prior research has focused primarily on feedback to individuals about narrowly defined tasks with clearly defined goals. We suggest that, because CSR assessments often address complex tasks, and involve conflicting viewpoints and high levels of uncertainty, the most important quality of CSR assessments that are accurate, reliable, and comprehensive is that they are more conclusive vs. inconclusive. CSR assessments may be inconclusive because the complexity that is often involved in evaluating socio-environmental performance can introduce ambiguity (Chowdhury, ; Livesey, ; Mena and Palazzo, ; Turcotte et al., ). This complexity arises from the often divergent interests of stakeholders involved in CSR assessment, and from the risks of opportunistic behavior by some. It also arises because the difficulty of measuring socio-environmental outcomes may exceed the expertise of participants (Chatterji et al., ; Chatterji and Levine, ). These challenges raise the possibility that CSR assessment may be inconclusive and therefore have little effect on the perceived service value of past or future work. For example, consider the issue of whether sugary beverages are causing childhood obesity. Insofar as assessments provide conflicting evidence and are inconclusive (Kaplan, ), they merely introduce ambiguity and would therefore have a limited effect on a soft drink company employee’s perceptions of the service value of their work. However, to the degree that such assessments would provide more conclusive information, they would help quantify the impacts of sugary beverages on childhood obesity. In such a scenario, a conclusive positive assessment would validate the service value of marketing soft drinks to

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

 -   . 

children, while a conclusive negative assessment would highlight the potential service value of taking corrective action. Such actions might include finding alternative sources of revenue that do not involve promoting children’s consumption of soft drinks, which some soft drink companies have begun to do (see Poinski, ; Taylor, ). Thus, we suggest that it is not the positive or negative verdict of the assessment per se that creates the opportunity for meaningful work through service, but rather the conclusiveness of the assessment determined by its accuracy, reliability, and comprehensiveness. Proposition : More conclusive (i.e. accurate, reliable, comprehensive) CSR assessments are positively associated with the experience of meaningful work (via the service value of work).

CSR Attributions Whereas CSR assessments focus on specific firm activities, CSR attributions are inferences made by stakeholders regarding the general character of the firm as socially responsible or irresponsible. These generalized attributions may subsequently influence stakeholder beliefs about other unobserved characteristics of the organization, such as the quality of its products and the trustworthiness of organizational members (Ellen et al., ; Godfrey et al., ; Vlachos et al., , , , ;). For example, when we come to believe that an organization has the character of being responsible, we often also attribute the responsible character to its leaders, managers, and employees that we have never personally met or assessed. Consider two examples illustrating how CSR attributions affect employees differently than do CSR assessments. For many years, legal professionals gave the Catholic Church the benefit of the doubt in its handling of child abuse (Cullen, ). Though prosecutors and judges assessed specific instances of child abuse by clergy as unequivocally unacceptable, they nevertheless continued to attribute to Catholic clergy (in general) the attributes of being responsible stewards of children who would address issues of child abuse. In the face of what turned out to be a fairly systemic problem, the positive attributions of prosecutors and judges about church clergy changed very slowly. In contrast, consider the effects of negative CSR attributions in fostering deep distrust of tobacco companies, arising from decades of questionable behavior. Such distrust has rendered tobacco companies’ subsequent attempts at corporate philanthropy ineffective because stakeholders attribute irresponsible character and motives to the companies, their employees, and their philanthropic activities (Palazzo and Richter, ). These examples illustrate how CSR attributions are “stickier” than CSR assessments, in the sense that they are temporally persistent, and tend to become attached to all organizational members and activities (Bolton and Reed, ; Gilbert and Malone, ). Thus, while CSR assessments tend to be specific, impersonal, and based on recent performance, CSR attributions are based on historical behavior, and on prior beliefs

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

and potential biases of stakeholders (Kelley and Michela, ). As a result, CSR attributions are difficult to influence through current performance. Because they are not closely linked to specific activities or performance, CSR attributions provide little guidance to employees about the service value of their work. They are also unlikely to influence the intrinsic value of work because they do not affect employees’ work tasks. Rather, we suggest that, due to their “stickiness,” CSR attributions primarily present employees with the incentive to either associate more closely with their organization when it is associated with positive attributions, or dissociate themselves from their organization when it is associated with negative attributions. For this reason, we posit that CSR attributions influence meaningful work primarily by shaping the kinship value of organizational membership. Specifically, because individuals tend to value membership in groups that are viewed more positively (Ashforth and Mael, ), positive CSR attributions will increase the meaningfulness of being an organizational member, while negative attributions will reduce the meaningfulness of being an organizational member. When the attribution is made by a wide swath of stakeholders (including the workforce as a stakeholder group), it is expected to be more pervasive and perceptually available to employees. As a result, greater awareness of a CSR attribution is expected to increase the salience of the attribution for employees, and therefore have a stronger effect on the kinship value of work and consequently, the experience of meaningful work. We therefore propose: Proposition : More pervasive positive (negative) CSR attributions are associated with increases (decreases) in the experience of meaningful work (via the kinship value of work).

CSR Responses CSR responses are the activities that organizations undertake in response to stakeholders’ expectations. Insofar as they reflect unmet expectations of stakeholders, negative CSR assessments and attributions can also motivate CSR responses. Organizations often respond to such stakeholder expectations by implementing new programs and standards, by restructuring their processes and routines, and/or by developing new knowledge, skills, and relationships (Bansal and Roth, ; Frederick, , ; Jiang and Bansal, ; Sethi, , ; Strand, ). Employees’ involvement as targets or implementers of these organizational responses can result in changes to their existing work roles, which can be intrinsically motivating because they provide opportunities for personal growth. For example, past research has documented employee personal growth and learning through participation in corporate volunteering programs (Caligiuri et al., ; Pajo and Lee, ; Pless et al., ). Further, corporate efforts to address environmental problems and engage in responsible sourcing often require employees to develop new competencies (e.g. certifications) and come up with

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

 -   . 

creative innovations (e.g. eco-initiatives; Ramus and Steger, ; Sharma and Vredenburg, ). The idea that CSR responses create opportunities for employees to develop new capabilities for themselves and their organizations is also suggested by research showing that CSR responses are associated with increased organizational capability (Eccles et al., ; Flammer and Kacperczyk, ; Sharma and Vredenburg, ). Work design scholars have thought about personal growth in terms of employees’ development of personal competence, relatedness, and autonomy through their work (Behson et al., ; Deci et al., ; Dysvik et al., ; Grant and Shin, ). We adopt this perspective to explain how CSR responses would increase the intrinsic value of work. CSR responses can provide employees with opportunities for personal growth through the development of skills and abilities (competence), the development of meaningful relationships with stakeholders (relatedness), and the exercising of personal choice and creativity in coming up with solutions to socio-environmental challenges (autonomy). Such opportunities are likely to arise because CSR responses often require discretionary workplace behavior, problem-solving, and interdependence with stakeholders—all characteristics of work that are positively associated with meaningful work and intrinsic work motivation (Humphrey et al., ). This is supported by empirical studies showing that more socially responsible organizations are better able to meet employees’ developmental needs, as compared to less responsible companies. This effect has been shown to hold true even for employees who do not value CSR (Du et al., ). We therefore propose: Proposition : Employees’ involvement in CSR responses will be associated with increased experience of meaningful work (via the intrinsic value of CSR-related work).

Boundary Conditions on the Effects of CSR on Meaningful Work Our propositions have illustrated how CSR creates demands that employees can find meaningful. In this section, we discuss individual-level boundary conditions on these effects. These boundary conditions are derived from the literatures on moral behavior, work motivation, and organizational and occupational identification. They highlight contingencies that determine whether the demands of CSR are perceived to be meaningful or burdensome, and thus whether the facets of CSR increase vs. decrease positive meaning in work and thus the experience of meaningful work.

Employees’ agreement with stakeholder expectations, assessments, and attributions CSR expectations, assessments, and attributions represent stakeholders’ views that are imposed on organizational members. Employees’ agreement with such views can range from indifference or ambivalence about stakeholders’ views to strong agreement or

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

opposition. The latter may occur if employees have a sense of moral conviction that stakeholders’ expectations are particularly right or wrong. Variance in employees’ agreement with stakeholder views would be a function of employees’ personal values, and their perception of the legitimacy of stakeholders’ claims (Mitchell et al., ). For instance, in the Port Authority example previously discussed, some employees initially strongly disagreed (based on principle) that the Port Authority had a responsibility to deal with the issue of homelessness at its facilities. They saw homelessness as the responsibility of social services (Dutton and Dukerich, ). Other employees may have been indifferent, or ambivalent about whether the Port Authority should address the issue. As the issue evolved, some employees appear to have felt a sense of moral obligation to address the issue. Thus, while we expect increased exposure to CSR expectations, more conclusive CSR assessments, and more pervasive CSR attributions to influence employees’ personal views, we nevertheless also expect subjective differences in agreement with stakeholders to act as a boundary condition on the effects of CSR on meaningful work. We suggest that the more employees agree with CSR expectations, the more they will perceive opportunities for service through meeting those expectations. When employees feel that stakeholders’ CSR expectations are illegitimate, they would disagree with those expectations, and would not see them as an opportunity for service. Even if they are forced to comply with such expectations, employees would see them as a burden, rather than as an opportunity for service. The same would be true for CSR assessments. Because positive CSR assessments validate that the organization is meeting expectations, and negative assessments indicate additional effort that is needed to meet CSR expectations, the effect of the CSR assessment on the service value of the employees’ work will depend on the perceived legitimacy of the underlying expectations. For example, for years, managers at Nike insisted that their organization was not responsible for the working conditions at its overseas suppliers, even while many of their consumers and members of the general public argued that Nike did have such a responsibility (Nisen, ). In these early years, we posit that stakeholders’ CSR expectations and assessments were likely to be more of a source of stress for these managers than a source of meaningful work through service. Nike has since embraced its responsibilities for overseas working conditions, winning accolades for its more responsible sourcing practices (Newell, ). To the degree that Nike employees now agree with stakeholders’ expectations and assessments of responsible sourcing, we would expect such expectations to be more positively related to the experience of meaningful work. Thus, we suggest that, when employees agree with stakeholder expectations and assessments, those expectations and assessments will have a stronger effect on the service value of work. Proposition : The effects of (a) CSR expectations and (b) CSR assessments on the service value of work (and hence experienced meaningfulness) will be stronger when employees agree with the CSR expectations/assessments.

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

 -   . 

Employees may also not necessarily agree with CSR attributions if they do not share the perspective of the stakeholders making the attributions. For example, before being found guilty of widespread fraud, Enron was a well-regarded company, being declared by Fortune Magazine the most innovative company in corporate America for six years leading up to its demise in  (McLean and Elkind, ). Thus, Enron may have benefitted from positive CSR attributions. However, some employees within the company were aware of the company’s unethical practices (Lagorio and Gonzalez, ), and may not have shared stakeholders’ belief that Enron was exemplary. This illustrates how, because attributions are typically made about unobservable characteristics, employee disagreement with stakeholder attributions can arise because employees are able to directly observe organizational characteristics that others cannot (note: the opposite may at times also be true). When employees agree with CSR attributions, both positive and negative CSR attributions would have a stronger effect on the kinship value of work. That is, employees would be more likely to dissociate themselves from the organization if they agree with negative CSR attributions, and more likely to derive kinship value from their organizational membership when they agree with positive CSR attributions. If they disagree with the CSR attributions, then the attributions would have a weaker effect on the kinship value of work. Proposition : The effects of CSR attributions on the kinship value of work (and hence experienced meaningfulness) will be stronger when employees agree with the CSR attributions.

Employees’ perceived control over harms and benefits We suggest that the effects of CSR expectations and assessments on the service value of work would also be contingent on employees’ perceived control over related harms and benefits. Given that CSR is typically a collective effort, employees’ sense of control would depend not only on their personal control, but also on their assessment of the willingness and ability of the collective organization to control the harms and benefits of their activities. We suggest that organizations’ ability to control the harms and benefits associated with their activities can be outpaced by social and technological change. For example, apparel companies have struggled for many years to increase their control over working conditions in their global supply chains (Abrams, ; Kaine and Josserand, ); and today, new technology platforms such as Facebook and Google are beleaguered by emerging adverse impacts related to freedom of speech (including hate speech), the spread of propaganda, and questionable consumer targeting (Angwin et al., ; Wingfield et al., ). We have argued that both CSR expectations and negative CSR assessments can be meaningful because they suggest future opportunities for service through one’s work. However, such future opportunities for service are only relevant if employees perceive control over the harms and benefits associated with the CSR expectations or negative CSR assessments. If the organization is unwilling to accept responsibility, or unable to

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

address a negative CSR assessment, then the opportunity for future service would be reduced or non-existent. This argument is consistent with work showing that, in the absence of a sense of control over outcomes, workplace demands and expectations typically lead to employee stress and withdrawal, rather than the experience of meaningful work (Bakker and Demerouti, ; Baumeister and Vohs, ; Dwyer et al., ; Fox et al., ; Karasek, ). For instance, in our earlier example, had the Port Authority not been able to address the issue of homelessness, the issue would likely have become a source of stress and dissatisfaction rather than an opportunity for service through work (thus stifling the opportunity for increased experiences of meaningful work). Likewise, the effects of positive CSR assessments on the service value of work (and hence experienced meaningfulness) are expected to be stronger to the degree that employees feel that the organization and its members had control in achieving claimed positive outcomes. If employees do not believe that the organization played an instrumental role in achieving the assessed outcomes, positive CSR assessments are expected to have a weaker effect on the service value of work (and hence experienced meaningfulness) than if employees believe that the organization was instrumental in achieving the assessed outcomes. Thus, we propose: Proposition : The positive effects of (a) CSR expectations and (b) CSR assessments on the service value of work (and hence experienced meaningfulness) will be stronger when employees perceive that they (collectively) have control over the harms and benefits of the organization’s activities.

Employees’ identification with the target of CSR attributions We expect the effects of CSR attributions on the experience of meaningful work through kinship to depend on the degree to which employees identify with the target of the CSR attributions. By target, we are referring to the party about whom the attribution is made. This may be the organization, and in such cases, organizational identification would be the focal moderator. However, it may also be an entire industry, as in our earlier example of tobacco companies; or an entire profession, as in our earlier example of church clergy. We suggest that employees who identify more strongly with the attributional target will be more resistant to CSR attributions and therefore less affected by them. We explain this effect by considering how negative CSR attributions typically affect group members. Research on identity threat suggests that group members respond to salient negative attributions about the group either by attempting to protect the threatened group identity (identity protection), or by making the threatened group identity less central to their self-concept (i.e. identity restructuring; Petriglieri, ). In the face of negative CSR attributions, employees who identify more strongly with the attributional target would be more likely to engage in identity protection attempts (Ashforth and Kreiner, ; Petriglieri, ). To protect a threatened identity, group members may attempt to refocus stakeholders’ attention on the group’s positive attributes, introduce favorable comparisons to lower status (e.g. less responsible)

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

 -   . 

parties, or attempt to shift blame (Ashforth and Kreiner, ; Elsbach, ; Elsbach and Kramer, ; Elsbach and Sutton, ). In some cases, group members may even reframe the negative attributions as a badge of honor. For example, Pratt () describes how Amway sales representatives sometimes strained personal relationships by attempting to push products onto friends and relatives. Whereas outsiders saw the salesforce as having been coerced into aggressive sales tactics, the sales representatives viewed the soured relationships as evidence of their own professional assertiveness—a characteristic prized by Amway personnel. Such identity protection tactics shield employees who strongly identify with an attributional target from the effects of negative attributions that are made about it. In contrast, those who do not strongly identify with the attributional target have little incentive to invest in identity protection efforts. For employees who do not strongly identify with the attributional target, positive CSR attributions would enable the development of strong interpersonal attachments at work, and negative CSR attributions would problematize development of such attachments, to a greater degree. In other words, when identification is weak, negative CSR attributions would be expected to lead to identity restructuring, either by exiting the organization or by cognitively dissociating oneself, which would reflect reduced kinship value of organizational membership. We therefore propose: Proposition : Increased identification with the target of CSR attributions will weaken the effects of CSR attributions on the kinship value of work (and hence experienced meaningfulness).

Employees’ perceived personal growth through CSR involvement We argued earlier that employee involvement in CSR responses can lead to the experience of meaningful work through its intrinsic value. We further posit that this effect will be contingent on employee perceptions of personal growth (i.e. increased competence, relatedness, or autonomy) through involvement in the CSR responses. In acknowledging this boundary condition, we seek primarily to highlight that: () not all CSR responses facilitate employees’ personal growth, and () not all employees will perceive CSR involvement as an opportunity for growth. On the one hand, CSR responses that impose tedious requirements will provide fewer opportunities for employees to develop their personal competence, relatedness, and autonomy, and will therefore not enhance the intrinsic value of their work. On the other hand, opportunities for personal growth through CSR involvement will not be determined solely by task characteristics, but also by individual differences that determine the degree to which employees view challenging work as personally fulfilling. For example, job design research suggests that individuals differ in their need for growth (Fried and Ferris, ; Graen, Scandura, and Graen, ; Hackman and Lawler, ; Shalley et al., ). Further, “hardiness” research suggests that some employees see growth opportunity in difficult situations and “find ways of turning whatever they are experiencing into something that seems interesting and important to them” (Maddi and

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

Khoshaba, , ; Turnipseed, ). Thus, perceived growth through CSR involvement is expected to be a function of both task characteristics and individual differences. Ultimately, the proposed effects of CSR responses on the intrinsic value of work (and hence experienced meaningfulness) is expected to be stronger to the extent that employees perceive opportunities for growth through CSR involvement. Proposition : The effects of CSR responses on the intrinsic value of work (and hence experienced meaningfulness) will be stronger when employees perceive personal growth through CSR involvement.

S, I,  C

.................................................................................................................................. In this chapter, we have explained how different facets of CSR potentially affect the experience of meaningful work through their influence on distinct sources of positive meaning in work. Specifically, we described: () how CSR expectations help guide employees as to which aspects of their work are of value to others; () how CSR assessments provide potentially valuable feedback to employees about whether they are meeting stakeholders’ expectations; () how CSR attributions affect employees’ experience of kinship at work; and () how CSR responses provide opportunities for employees to develop and demonstrate personal competence, relatedness, and agency in addressing stakeholders’ socio-environmental concerns. We further proposed how these effects are contingent upon: () the extent to which employees agree with stakeholder expectations, assessments and attributions; () employees’ perceptions of their collective control over the harms and benefits of their work; () employees’ identification with an organization or occupation; and () employees’ perceptions of personal growth opportunities through CSR involvement. We now discuss implications of our propositions for research and practice.

Dynamic Influence of CSR on Meaningful Work Our discussion of the facets of CSR highlights how CSR can have several meanings both for researchers and employees, and it facilitates bringing together various ways in which CSR affects employees’ experience of work. These facets of CSR are highly related. For example, as noted previously, negative CSR assessments and attributions can reflect unmet expectations of stakeholders. These, in turn, may trigger subsequent CSR responses that will be subject to subsequent CSR assessments and that will shape subsequent CSR attributions. However, we have suggested that these facets of CSR affect the experience of meaningful work through different mechanisms. As a result, in conjunction, these facets of CSR shape not only the extent to which employees

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

 -   . 

experience meaningfulness at work, but also the specific types of positive meaning that employees derive from their work. For example, for employees who identify strongly with a stigmatized organization (e.g. a tobacco company), repeated negative assessments of their CSR efforts may reduce opportunities for experienced meaningfulness through service such that, over time, kinship may come to be the primary type of positive meaning available in their work.

The Dark Side of CSR: Uncertainty, Meaningful Work, and CSR Effectiveness The main effects proposed in this chapter suggest factors that make CSR more or less meaningful to employees, while the proposed boundary conditions highlight factors that can potentially help employees cope with the changing expectations and demands of CSR, as well as the uncertainty that CSR potentially introduces into the workplace. This aspect of uncertainty associated with the challenges of CSR has received relatively little attention in management research, but could be an important area for future research. Prior research suggests that employees can be either opposed to CSR, indifferent about it, or committed to it (Rodrigo and Arenas, ; Slack et al., ). To the degree that it is desirable for employees to engage with CSR—and by engage, we mean primarily that they are not apathetic about CSR but rather exercise voice and contribute to constructive outcomes—uncertainty may be a major barrier to employees’ engagement. In particular, our prior discussion suggests that employees’ lack of engagement with CSR may be caused by insufficient exposure to stakeholders’ CSR expectations, inconclusive (or perhaps non-existent) CSR assessments, CSR attributions that are not based on assessment of actual performance, and finally, perhaps a lack of opportunity to provide input and exercise personal agency in responding to CSR expectations and assessments. Because many CSR-related outcomes are achieved through the work of employees, research on how CSR creates uncertainty and potentially burdens employees, and on factors that help employees to constructively manage these challenges, would be important both for providing meaningful work and for improving CSR outcomes. The implications of such uncertainty for CSR outcomes is also illustrated by considering the potential for opportunistic behavior by employees. For example, some writers have suggested that CSR can be used by organizations to consolidate their power and achieve goals unrelated, and sometimes detrimental to, the greater good (Banerjee, ; Bowen and Aragon-Correa, ; Bromley and Powell, ; Costas and Kärreman, ; Crilly et al., ; Gond et al., ; Hawn and Ioannou, ; Hess and Warren, ; Visser, ; Vogel, ). Ultimately, such behavior is facilitated by uncertainty about CSR. Specifically, it is facilitated by organizations’ ability to benefit from: () CSR attributions that are not based on facts, () CSR expectations and responses that are not

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

conclusively assessed, and () the marginalization of CSR as a peripheral organizational activity into which most employees have minimal input (Aguinis and Glavas, ). Research is needed to assess the degree to which such uncertainty provides organizations extrinsic benefits from CSR—that is, benefits unrelated to socio-environmental performance, as well as how such a phenomenon stands to impede both employee wellbeing and CSR effectiveness.

C

.................................................................................................................................. In conclusion, although research interest in employees’ experience of CSR is growing, recent reviews have noted insufficient attention to CSR attributions, sensemaking processes, and contextual factors that influence employees’ evaluations and reactions to CSR (Gond et al., ). In this chapter, we have described how expectations of social responsibility can shape employees’ understanding of the service value of their work, and how assessments of socio-environmental performance can provide useful feedback about the service value of their work. We also described how stakeholder attributions of corporate (ir)responsibility can influence the kinship value of organizational membership; and how organizational responses to stakeholder expectations can change employees’ jobs in ways that increase the intrinsic value of their work. To date, these potential effects of CSR on meaningful work are relatively under-studied and provide fertile areas for future research.

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 -   . 

Kahn, W. A. . Psychological conditions of personal engagement and disengagement at work. Academy of Management Journal, , –. Kaine, S. J., and Josserand, E. . Mind the gap: Grass roots “brokering” to improve labour standards in global supply chains. Human Relations, , –. Kaplan, S. . New C.D.C. chief saw Coca-Cola as ally in obesity fight. New York Times, July . Karasek, R. A. . Job demands, job decision latitude, and mental strain: Implications for job redesign. Administrative Science Quarterly, , . Kelley, H. H., and Michela, J. L. . Attribution theory and research. Annual Review of Psychology, , –. Lagorio, C., and Gonzalez, V. . Enron schemes caught on tape. CBS News, Feb. . Lips-Wiersma, M., and Morris, L. . Discriminating between “meaningful work” and the “management of meaning.” Journal of Business Ethics, , –. Livesey, S. M. . Eco-identity as discursive struggle: royal Dutch/Shell, Brent Spar, and Nigeria. Journal of Business Communication, , –. Locke, E. A., and Latham, G. P. . Building a practically useful theory of goal setting and task motivation: A -year odyssey. American Psychologist, , –. Lounsbury, M. . Institutional sources of practice variation: Staffing college and university recycling. Administrative Science Quarterly, , –. McLean, B., and Elkind, P. . The guiltiest guys in the room. Fortune Magazine., July . Maddi, S. R., and Khoshaba, D. M. . Hardiness and mental health. Journal of Personality Assessment, , –. Maitlis, S. . The social processes of organizational sensemaking. Academy of Management Review, , –. Margolis, J. D., Grant, A. M., and Molinsky, A. L. . Expanding ethical standards of HRM: Necessary evils and the multiple dimensions of impact. In A. Pinnington, R. Macklin, and T. Campbell (eds), Human Resource Management: Ethics and Employment, –. New York: Oxford University Press. Margolis, J. D., Benson, G., Cooper, C. D., and Galvin, J. . Navigating the bind of necessary evils: Psychological engagement and the production of interpersonally sensitive behavior. Academy of Management Journal, , –. Márquez, A., and Fombrun, C. J. . Measuring corporate social responsibility. Corporate Reputation Review, , –. Marquis, C., and Davis, G. F. . Community isomorphism and corporate social action. Academy of Management Review, , –. Matten, D., and Moon, J. . “Implicit” and “explicit” CSR: A conceptual framework for a comparative understanding of corporate social responsibility. Academy of Management Review, , –. Mattingly, J. E., and Berman, S. . Measurement of corporate social action: Discovering taxonomy in the Kinder Lydenburg Domini ratings data. Business and Society, , –. May, D. R., Gilson, R. L., and Harter, L. M. . The psychological conditions of meaningfulness, safety and availability and the engagement of the human spirit at work. Journal of Occupational and Organizational Psychology, , –. Mena, S., and Palazzo, G. . Input and output legitimacy of multi-stakeholder initiatives. Business Ethics Quarterly, , –. Michaelson, C., Pratt, M. G., Grant, A. M., and Dunn, C. P. . Meaningful work: Connecting business ethics and organization studies. Journal of Business Ethics, , –.

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Mitchell, R. K., Agle, B. R., and Wood, D. J. . Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, , –. Mitnick, B. M. . Commitment, revelation, and the testaments of belief: The metrics of measurement of corporate social performance. Business and Society, , –. Molinsky, A. L., and Margolis, J. D. . Necessary evils and interpersonal sensitivity in organizations. Academy of Management Review, , –. Molinsky, A. L., Grant, A. M., and Margolis, J. D. . The bedside manner of homo economicus: How and why priming an economic schema reduces compassion. Organizational Behavior and Human Decision Processes, , –. Newell, A. . How Nike embraced CSR and went from villain to hero. Triple Pundit, June . Nisen, M. . How Nike solved its sweatshop problem. Business Insider, May . O’Reilly, C. A., and Chatman, J. A. . Organizational commitment and psychological attachment: The effects of compliance, identification, and internalization on prosocial behavior. Journal of Applied Psychology, , –. Okoye, A. . Theorising corporate social responsibility as an essentially contested concept: Is a definition necessary? Journal of Business Ethics, , –. Pajo, K., and Lee, L. . Corporate-sponsored volunteering: A work design perspective. Journal of Business Ethics, , –. Palazzo, G., and Richter, U. . CSR business as usual? The case of the tobacco industry. Journal of Business Ethics, , –. Parmar, B. L., Freeman, R. E., Harrison, J. S., Wicks, A. C., Purnell, L., and de Colle, S. . Stakeholder theory: The state of the art. Academy of Management Annals, , –. Petriglieri, J. L. . Under threat: Responses to and the consequences of threats to individuals’ identities. Academy of Management Review, , –. Piccolo, R. F., and Colquitt, J. A. . Transformational leadership and job behaviors: The mediating role of core job characteristics. Academy of Management Journal, , –. Pless, N. M., Maak, T., and Stahl, G. . Developing responsible global leaders through international service-learning programs: The Ulysses experience. Academy of Management Learning and Education, , –. Poinski, M. . Coca-Cola beats expectations as new CEO moves away from soda. Food Dive, July . Pratt, M. G. . The good, the bad, and the ambivalent: Managing identification among Amway distributors. Administrative Science Quarterly, , –. Pratt, M. G., Rockmann, K., and Kaufmann, J. . Constructing professional identity: The role of work and identity learning cycles in the customization of identity among medical residents. Academy of Management Journal, , –. Pratt, M. G., Pradies, C., and Lepisto, D. A. . Doing well, doing good, and doing with: Organizational practices for effectively cultivating meaningful work. In M. F. Dik, B. J., Byrne, Z. S., and Steger (eds), Purpose and Meaning in the Workplace, –. Washington, DC: American Psychological Association. Ramus, C. A., and Steger, U. . The roles of supervisory support behaviors and environmental policy in employee “Ecoinitiatives” at leading-edge European companies. Academy of Management Journal, , –. Rodrigo, P., and Arenas, D. . Do employees care about CSR programs? A typology of employees according to their attitudes. Journal of Business Ethics, , –.

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

 -   . 

Ros, M., Schwartz, S. H., and Surkiss, S. . Basic individual values, work values, and the meaning of work. Applied Psychology, , –. Rousseau, D. M. . Why workers still identify with organizations. Journal of Organizational Behavior, , –. Ryan, R. M., and Deci, E. L. . Self-determination theory and the facilitation of intrinsic motivation, social development, and well-being. American Psychologist, , –. Salancik, G. R., and Pfeffer, J. . A social information processing approach to job attitudes and task design. Administrative Science Quarterly, , –. Scherer, A. G., and Palazzo, G. . Toward a political conception of corporate responsibility: Business and society seen from a Habermasian perspective. Academy of Management Review, , –. Seeman, M. . On the personal consequences of alienation in work. American Sociological Review, , –. Sethi, S. P. . Dimensions of corporate social performance: An analytical framework. California Management Review, (), –. Sethi, S. P. . A conceptual framework for environmental analysis of social issues and evaluation of business response patterns. Academy of Management Review, , . Shalley, C. E., Gilson, L. L., and Blum, T. C. . Interactive effects of growth need strength, work context, and job complexity on self-reported creative performance. Academy of Management Journal, , –. Shamir, B. . Meaning, self and motivation in organizations. Organization Studies, , –. Sharma, S., and Vredenburg, H. . Proactive corporate environmental strategy and the development of competitively valuable organizational capabilities. Strategic Management Journal, , –. Slack, R. E., Corlett, S., and Morris, R. . Exploring employee engagement with (corporate) social responsibility: A social exchange perspective on organisational participation. Journal of Business Ethics, , –. Sluss, D. M., and Ashforth, B. E. . Relational identity and identification: Defining ourselves through work relationships. Academy of Management Review, , –. Srivastava, A., Locke, E. A., and Bartol, K. M. . Money and subjective well-being: It’s not the money, it’s the motives. Journal of Personality and Social Psychology, , –. Steelman, L. A., and Rutkowski, K. A. . Moderators of employee reactions to negative feedback. Journal of Managerial Psychology, , –. Steger, M. F., Dik, B. J., and Duffy, R. D. . Measuring meaningful work: The work and meaning inventory (WAMI). Journal of Career Assessment, , –. Strand, R. . A systems paradigm of organizational adaptations to the social environment. Academy of Management Review, , –. Taylor, K. . Pepsi isn’t a soda company anymore. Business Insider, Apr. . Turcotte, M. F., Reinecke, J., and Den Hond, F. . Explaining variation in the multiplicity of private social and environmental regulation: A multi-case integration across the coffee, forestry and textile sectors. Business and Politics, , –. Turnipseed, D. L. . An exploratory study of the hardy personality at work in the health care industry. Psychological Reports, , –. Visser, W. . Exposing the CSR pretenders. .

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Vlachos, P. A., Tsamakos, A., Vrechopoulos, A. P., and Avramidis, P. K. . Corporate social responsibility: Attributions, loyalty, and the mediating role of trust. Journal of the Academy of Marketing Science, , –. Vlachos, P. A., Theotokis, A., and Panagopoulos, N. G. . Sales force reactions to corporate social responsibility: Attributions, outcomes, and the mediating role of organizational trust. Industrial Marketing Management, , –. Vlachos, P. A., Panagopoulos, N. G., and Rapp, A. A. . Feeling good by doing good: Employee CSR-induced attributions, job satisfaction, and the role of charismatic leadership. Journal of Business Ethics, , –. Vlachos, P. A., Panagopoulos, N. G., Bachrach, D. G., and Morgeson, F. P. . The effects of managerial and employee attributions for corporate social responsibility initiatives. Journal of Organizational Behavior, , –. Vogel, D. . The private regulation of global corporate conduct: Achievements and limitations. Business and Society, , –. Waddock, S. . Building a new institutional infrastructure for corporate responsibility. Academy of Management Perspectives, , –. Waldman, D. A., Siegel, D. S., and Javidan, M. . Components of CEO transformational leadership and corporate social responsibility. Journal of Management Studies, , –. Waldman, D. A., Wang, D., Hannah, S. T., and Balthazard, P. A. . A neurological and ideological perspective of ethical leadership. Academy of Management Journal, , – . Wang, L., Malhotra, D., and Murnighan, J. K. . Economics education and greed. Academy of Management Learning and Education, , –. Wingfield, N., Isaac, M., and Benner, K. . Google and Facebook take aim at fake news sites. New York Times, Nov. . Wood, D. J. . Measuring corporate social performance: A review. International Journal of Management Reviews, , –. Wrzesniewski, A., Mccauley, C., Rozin, P., and Schwartz, B. . Jobs, careers, and callings: People’s relations to their work. Journal of Research in Personality, , –.

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  ......................................................................................................................

     Exploring the Potential Connections between Top Management Team/Board Diversity, CSR, and Workforce Diversity ......................................................................................................................

 . 

T simplest assumption about the relationship between corporate social responsibility (CSR) and diversity, and one made by a number of entities that attempt to assess the social performance of corporations (e.g. the Global Reporting Initiative, MSCI ESG research, ASSET), is that operationalizations of corporate social responsibility should include indicators that assess the gender and racial diversity of the workforce and of the top management team (TMT) and board. This approach assumes that improving workforce and upper echelon diversity on variables such as gender and race should be a CSR goal and that numbers matter. Clearly, improvement in the numbers of women and racial/ethnic minorities in the workforce, in top management, and on boards of directors matters (e.g. Ely, ; Kanter, ; Konrad et al., ; Lucas, ; Morrison and Milliken, ). But only focusing on the numbers of women and minorities oversimplifies—and may impede our understanding of the multi-faceted effects of diversity on team and organizational outcomes. Understanding the connections between diversity and CSR requires that we go beyond simply noting the percentages of women and minorities who are employed by an organization or serving on a board of directors. First, it is necessary to clarify what types of diversity we are talking about. There are visible forms of diversity, such as gender, age, race/ethnicity, and disability-based diversity, as well as less visible forms of diversity, such as diversity in values, education, childhood socio-economic background, functional background, industry background, and sexual orientation. Country

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of origin and religion are examples of sources of diversity that can sometimes be visible (e.g. in customs about dress and headgear), but sometimes not. A second factor that needs to be considered is the level of the organization at which we want to assess the effects of diversity (e.g. diversity at lower levels of the organization may have different effects than diversity that is achieved at both the lower levels and in the upper echelons of the organization). One reason why diversity in the upper echelons is especially important to consider is that the experiences of people at the lower levels of an organization are affected by the policies that are enacted by top-level decision-making entities. To the extent that the degree of diversity on a TMT might systematically affect CSR-related activities and practices, employees’ experience in the organization are likely to be affected. There are also important symbolic messages about the likelihood of advancement opportunities for women and minorities of all types that are conveyed by the representation of visibly different types of people at the top of the organization. The extent to which lower-level personnel see people who look like themselves at the top levels of the organization is likely to be a potentially important predictor of their behavior as well as of their satisfaction. For example, minorities and women may be less comfortable speaking up about problems or issues when they are working in an organizational context where there are relatively few women and minorities represented in the upper echelons (Ely, ; Kanter, ; Morrison and Milliken, ). Third, as many writers have recently noted, more attention needs to be paid to understanding the underlying mechanisms or “micro processes” through which organizational and team-level variables influence CSR (Aguinis and Glavas, ; Glavas and Godwin, ; Morgeson et al., ; Orlitzky et al., ). That is, we need to understand the underlying micro mechanisms by which gender, racial/ethnic identity, and other forms of diversity on a TMT or board of directors might affect CSR-related goals and actions. We also need to understand how an organization’s CSR-related actions, in turn, might influence the future likelihood of attracting and retaining individuals who have different profiles than the individuals at the top, especially women and minorities. Understanding the antecedents and consequences of workforce and management diversity is also complicated because some types of diversity (e.g. gender, race, ethnicity, possibly religion) are tied up with both organizational and societal differences in power (DiTomaso et al., ; Ely, ; Ely and Thomas, ; Konrad, ). Societal differences in power can be carried into the workplace in the form of stereotypes and other cultural expectations for appropriate behavior. For example, even when equal to their male colleagues in terms of power in the Senate, female senators were found to speak less than their male colleagues (Brescoll, ). Victoria Brescoll () goes on to show in other studies that this disinclination of women to speak as much as men has to do with fearing “backlash” for violating cultural stereotypes about the appropriate behavior for women. Organizational differences in power associated with sub-groups can affect how much members of the minority group are willing to express their opinions as well as the degree to which what they say is heard.

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 . 

The main focus of this chapter will be on exploring how and why the presence of diversity on a TMT or board of directors might affect the actions that the organization is likely to take with respect to goals and initiatives in the area of corporate CSR. I will also explore how an organization’s CSR-related actions, in turn, might influence the likelihood of attracting and retaining a diverse workforce, especially on visible variables such as race and gender. While I will try to introduce some of the complexities of the findings of the literature on diversity into my discussions of the relationship between diversity and CSR, as Van Knippenberg and Schippers (, ) noted: “much is still unclear about the effects of diversity,” a statement that is as descriptive today as it was ten years ago when they wrote their review. Thus, it is possible that future research will contradict some of the propositions in this chapter. Having stated that caveat, my perspective is that, in general, diversity in the upper ranks of organizations is likely to enhance the likelihood that an organization will take its corporate social responsibilities seriously. In the following sections, I will explain why I hypothesize this to be the case. I also hypothesize that organizations which have higher levels of CSR performance will tend to have more diverse workforces and I will explain some of the reasons why high levels of CSR performance seem likely to be connected to higher levels of workforce diversity. I have organized the chapter into four sections. In the first section, I will briefly discuss CSR and how it has been defined, as well as highlight a few of the debates and issues in the CSR literature that make agreeing on the measurement of the social aspects of CSR not so straightforward. I will use the United Nation’s efforts to define sustainable development goals as a lens for highlighting some of the categories of social responsibility goals that corporations might be viewed as having as they might relate to the management of diversity. In the following section, I will discuss some of the potential benefits [and costs] that diversity in a group or in an organization is thought to have. In the third section of the chapter, I will discuss some of the ways that specific different types of diversity, especially in terms of their presence on TMTs or boards, might influence an organization’s CSR performance. Finally, I will consider ways in which a firm’s CSR performance might affect its level of diversity, both at the workforce level and in the upper echelons of management.

C S R

.................................................................................................................................. McWilliams and Siegel (, ), in one of the most frequently cited definitions, defined CSR as “actions that appear to further some social good, beyond the interests of the firm and that which is required by law.” Similarly, Ruth Aguilera and colleagues () define CSR in terms of “the firm’s considerations of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm to accomplish social [and environmental] benefits along with the traditional economic gains which the firm seeks” (Aguilera et al., , –). Barnett (, )

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

defines CSR as “a discretionary allocation of corporate resources towards improving social welfare that serves as a means of enhancing relationships with key stakeholders.” Common to all these definitions are the ideas of taking actions to enhance “social good” or “social welfare” and that these actions are discretionary. That is, the actions go beyond legal requirements and economic goals to consider the impact of the organization’s activities on the physical and social environments in which it operates.¹ A key issue with these definitions of CSR is defining what we mean by “social welfare” or “social good.” Matten and Moon (, ) argue that: “Despite a vast and growing body of literature on CSR [Crane et al., ; Lockett et al., ] and on related concepts, defining CSR is not easy.” One of the most important points highlighted by Matten and Moon () is the idea that CSR is an umbrella concept including responsibilities to multiple stakeholders and to both the physical and social environment in which the firm operates. Progress is likely to vary on the various goals that a company might have under the umbrella of CSR. For example, progress on goals related to social sustainability or the social component of CSR seems to have generally been slower and considerably more variable than progress on some of the agreed-upon goals relating to aspects of the physical environment such as energy conservation or the use of water. The slower progress towards social goals may be because there is less agreement about what the desirable social goals might be across regions of the world. Matten and Moon () also highlight the idea that the envisioning of corporate social responsibilities is likely to be dynamic. For example, pursuing goals that are related to environmental sustainability, such as reducing packaging or greenhouse gas emissions, is now almost taken for granted in the business world, whereas articulating these types of goals was rare twenty years ago. In addition, as many writers have argued and demonstrated empirically (e.g. Freeman and Hasnaoui, ; Kolk, ; Maignan and Ralston, ; Matten and Moon, ; Waldman et al., ; Williams and Aguilera, ), the form that CSR takes is likely to vary across regions of the world. Matten and Moon (), for example, see the US as tending to focus more on what they call explicit CSR, while European countries focus more on implicit CSR. One approach to dealing with the issue that the meaning of CSR, especially the social dimensions of CSR, may vary across contexts would be to look towards an intergovernmental agency such as the United Nations and their Sustainable Development goals (SDGs) for some clarification of what goals a socially responsible business in the twenty-first century might need to be pursuing to meet an inter-governmental standard for corporate social responsibility.

¹ It is important to note that according to these definitions of CSR, the hiring of minorities and women or paying men and women equal salaries would not qualify as CSR if it is simply done to meet the requirements of federal or state laws.

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Table 5.1 The United Nations’ Sustainable Development Goals and their Connection to Managing and Engaging a Diverse Workforce UN SDG#

Goal

Examples of sub-goals listed by the United Nations

Relevance to Managing Diversity

1

Reducing Poverty

“By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources” Source:

Minorities and women tend to be more likely to live in poverty; so focusing on increasing opportunities for employment for women and minorities ought to help in reducing poverty as should any efforts to reduce income inequities across races, ethnicities, and genders.

3

Increasing health and well-being

“Strengthen the prevention and treatment of substance abuse, including narcotic drug abuse and harmful use of alcohol” Source:

Being discriminated against or otherwise unfairly treated in the workforce can have serious effects on both mental and physical well-being—creating stress and potentially addictions and other physiological problems associated with stress.

5

Working towards ensuring gender equality

“Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision making in political, economic and public life” Source:

When women are not treated equally to men in the work place, the goal of gender equality in the world is set back as well.

8

Promoting sustained, inclusive, and sustainable economic growth, full and productive employment and decent work for all.

“By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value By 2020, substantially reduce the proportion of youth not in employment, education or training.” Source:

Promoting inclusive and sustainable economic growth necessarily means providing economic opportunities for people who are not currently proportionately represented in the labor force or proportionately represented in higher level jobs

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10

Reducing Income Inequality within and between countries

“By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status” Source:

This goal is clearly related to providing increased opportunities to those who are shut out or discriminated against by employment organizations

17

Promoting Peace, Justice and Strong Institutions

“Ensure responsive, inclusive, participatory and representative decision-making at all levels.” Source:

Giving more power to women and other minorities in key decision-making roles in employment organizations would serve to promote decision making that is more representative of the various types of people in society.

The United Nations used a participatory process involving its  Member States to derive the SDGs and their specific targets. Table . lists six of the SDGs and the way in which the goal might be seen as having relevance for thinking about corporate social responsibility and the management of diversity in work organizations. In looking over these SDGs, it seems clear that promoting diversity in hiring decisions, as well as working towards helping people who are different from the group that dominates in the power structure, would be important in making progress towards the achievement of several of the SDGs. For example, reducing poverty will require higher levels of inclusion of those who are currently left out (often women and members of minority groups), whether through providing opportunities for entrepreneurship or through providing job opportunities in existing organizations. Similarly, the United Nations goals of equalizing job opportunities for women and moving towards gender equity in wages and promotion opportunities are clearly related to the effective management of diversity. Even the goal of increasing wellbeing and physical health would be positively impacted by the creation of more equity in hiring, wages, participation opportunities and promotion possibilities. Living with systematic disadvantage is associated with higher levels of stress and poor health outcomes. In the next section of this chapter, I will discuss the issues around group and workforce diversity in more detail and discuss why diversity matters. I will also tie the potential positive consequences of having a group that is diverse making decisions for the organization to making progress on the United Nations’ sustainable development goals.

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U  E  D

.................................................................................................................................. The word “diversity” often invokes controversy because people make assumptions about the meaning of the term that seem to reflect a misconception about what diversity is. Diversity is a property of a group or of a social entity like an organization, and it refers to the fact that the members of the social entity are different from one another on some relevant personal attributes. In this sense, diversity is simply capturing the idea that the social entity has variety; that is, it has members who have different characteristics from each other. Researchers have developed several typologies for making distinctions between different types of diversity that might be present in a group or organization. For example, Jackson et al. () differentiate between taskoriented diversity (e.g. functional differences, experience, education), which is associated with skill-based and informational differences; and relations-oriented types of diversity (e.g. gender, age, race, ethnicity), which are associated with visible and immutable differences that are often used as a basis for social categorization of people. Other researchers have differentiated between surface- and deep-level diversity (e.g. Harrison et al., ). Still others, as previously mentioned, have distinguished between visible and invisible forms of diversity (Jackson et al., ; Milliken and Martins, ; Tsui et al., ). One thing that complicates making predictions about the effects of diversity is that the effects of diversity are likely to vary over time and across contexts. For example, some of the forms of diversity might be invisible in initial interactions between individuals who do not know each other (e.g. diversity on values, religion, sexual orientation, socio-economic, educational, or functional background) but can become quite apparent in groups that interact over extended periods of time, such as TMTs (Carter and Phillips, ), and can sometimes cause fundamental disagreements and conflicts even among the members of a group that does not possess visible forms of diversity. In addition, the early interaction patterns of groups are likely to affect the balance of advantages and disadvantages of diversity that the group experiences in later stages of its life (Harrison et al., , ). Further, diversity may be harder or easier for people to deal with depending on the nature of the context (e.g. Martins et al., ).

Consequences of Diversity Having diversity in a group or organization has been found to have both positive and negative consequences for the group (Carter and Phillips, ; Kochan et al., ; Milliken and Martins, ; Pfeffer, ; Srikanth et al., ; Van Knippenberg and Schippers, ; Van Knippenberg et al., ; Williams and O’Reilly, ). In the next two sub-sections and in Table ., I briefly review some of the potential advantages and disadvantages associated with having high levels of diversity, using the team as the primary unit of analysis.

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Table 5.2 Positive and Negative Consequences of Diversity in the Upper Echelons of an Organization on Team and Organizational Outcomes

Effects of Visible Forms of Diversity (e.g. race, ethnicity, gender) on the top management team or board of directors

Potential Positive Consequences

Potential Negative Consequences

The possibility of a larger number and variety of perspectives on issues and a larger amount of knowledge being brought to the task, which has been shown to enhance decision-making and innovation, if properly managed.

Increased potential for conflict due to differences in perspectives among members of the team.

The possibility for increased effort due to the awareness that one is interacting with individuals who are different from one’s self; also enhanced team reflexivity.

Potential for reduced cohesion and satisfaction on the team due to increased conflict, potential communication differences.

Potential symbolic benefits for others who observe people like themselves at the top and see opportunities for themselves for upward mobility, and thus have enhanced motivation.

Categorization dynamics have the potential to create both explicit and implicit bias against members of the outgroup.

Potential for increased attractiveness to potential female employees and minority group members, creating the potential for access to a wider talent pool.

Emotional and psychological difficulties created for individuals who are tokens or in a small minority.

The possibility for connection to more diverse networks within and across stakeholder groups, which may provide better understanding of important social issues as well as a broader array of resources for managing these issues.

Effects of Less Obvious or Invisible Forms of Diversity (e.g. functional background, industry background, educational background, values) on the top management team or board of directors

An enhanced experience for minorities and women at lower levels of the organization.

The potential for backlash among members of the majority groups currently in power; fearing that their opportunities will be negatively impacted.

The possibility of a larger number and variety of perspectives on issues and a larger amount of knowledge being brought to the task, which has been shown to enhance decision making and innovation, if properly managed.

Increased potential for conflict due to differences in perspectives among member of the team.

(continued)

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Table 5.2 Continued Potential Positive Consequences

Potential Negative Consequences

The possibility for increased effort due to the awareness that one is interacting with individuals who are different from one’s self (Carter and Phillips, 2017; Sommers, 2006).

Potential for reduced cohesion and satisfaction on the team due to increased conflict, potential communication differences.

Symbolic benefits for others who notice the diversity in backgrounds to feel like themselves at the top and see opportunities for themselves for upward mobility.

Emotional and psychological difficulties created for individuals who are tokens or in a small minority.

The possibility for connection to more diverse networks within and across stakeholder groups, which may provide better understanding of important social issues as well as a broader array of resources for managing these issues.

I will concentrate my attention on the likely impact of having different types of people on the TMT and board of directors because, as I have argued, the effects of diversity at the top of the organization are likely to be more multi-faceted in nature than the effects of diversity at lower levels. TMTs and boards are visible decisionmaking entities and thus, the composition of these teams can have important symbolic meaning for others. Also, and most importantly for the purposes of this chapter, TMTs and boards have the power to make decisions and take actions that affect all the key constituencies within an organization and thus, these top-level groups are likely to have a large influence on an organization’s CSR-related goals and actions. In the following sections, I will attempt to differentiate between the advantages and disadvantages of visible and invisible forms of diversity on team functioning as well as outline what we know about the symbolic and motivational effects of observing diversity in important decision-making groups on the behavior of others. It should be noted, however, that predicting how diversity might affect a particular group, workunit, or organization is not easy as all of the positive and negative consequences will not necessarily be manifested in every diverse group. In Table . and in the following sections, I will attempt to show how the advantages or benefits associated with diversity might be connected to outcomes that are related to CSR goals, especially to making progress towards the UN’s sustainable development goals.

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Table 5.3 Likely Positive Consequences of Diversity in the Upper Echelons of an Organization on Corporate Social Responsibility and Firm Performance Potential Consequences for Financial, Social, Environmental Performance andInternal CSR

United Nations’ Sustainable Development Goals addressed

The possibility of a larger number and variety of perspectives on issues and a larger amount of knowledge being brought to the task, which has been shown to enhance decision-making and innovation, if properly managed.

Better quality decisionmaking, leading to enhanced financial, social, and environmental performance for the firm.

Could facilitate progress on all the SDGs.

The possibility for increased effort due to the awareness that one is interacting with individuals who are different from one’s self; also enhanced team reflexivity.

Better quality decisionmaking, leading to enhanced financial, social, and environmental performance for the firm.

Could facilitate progress on all the SDGs

Symbolic benefits for others who observe people like themselves at the top and see opportunities for themselves for upward mobility.

Greater sense of inclusion leads to more participation and engagement by members of disadvantaged groups and women; greater sense of economic opportunity.

SDGs 3, 5, 8, 10, and 17

Potential for increased attractiveness to potential female employees, minority group members, and individuals with disabilities, creating the potential for access to a wider talent pool.

Increased diversity of the workforce; more economic inclusion for more types of people (women, minorities, individuals with disabilities).

Could facilitate progress on all the SDGs.

The possibility for connection to more diverse networks within and across stakeholder groups, which may provide better understanding of important social issues.

Better quality decisionmaking because more information is available; more economic inclusion for more types of people, both within and outside the boundaries of the organization (women, minorities, individuals with disabilities).

Could facilitate progress on all the SDGs.

Potential Positive Consequences The effects of visible forms of diversity (e.g. race, ethnicity, gender) on the top management team or board of directors

(continued)

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Table 5.3 Continued Potential Consequences for Financial, Social, Environmental Performance andInternal CSR

United Nations’ Sustainable Development Goals addressed

An enhanced experience for minorities and women at lower levels of the organization.

Reduced stress; increased sense of inclusion.

SDGs 3, 5, 8, and 17.

The possibility of a larger number and variety of perspectives on issues and a larger amount of knowledge being brought to the task, which has been shown to enhance decision-making and innovation, if properly managed.

Better quality decisionmaking, leading to enhanced financial, social, and environmental performance.

Could facilitate progress on all the SDGs.

The possibility for increased effort due to the awareness that one is interacting with individuals who are different from one’s self.

Better quality decisionmaking, leading to enhanced financial, social, and environmental performance for the firm.

Could facilitate progress on all the SDGs

Symbolic benefits for others who notice the diversity in backgrounds to see opportunities for themselves for upward mobility.

Greater sense of inclusion leads to more participation and engagement by some organizational members.

SDGs 3, 5, 8, 10, and 17

The possibility for connection to more diverse networks within and across stakeholder groups, which may provide better understanding of important social issues.

Better quality decisionmaking because more information is available; more economic inclusion for more types of people.

Could facilitate progress on all the SDGs.

Potential Positive Consequences

The effects of Less Obvious or Invisible Forms of Diversity (e.g. functional background, educational background, values) on the top management team or board of directors

Potential benefits associated with diversity in a group or organization The presence of diversity in a group suggests that the individuals in that group are likely to have different skills, information sources, backgrounds, experiences, and perspectives. These differences in perspectives, information, and knowledge, if surfaced and managed effectively, can enrich a group’s discussions and can potentially be

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associated with an enhanced likelihood of creativity and innovation, as well as with higher quality decision-making (Milliken and Martins, ; Phillips, ; Van Knippenberg and Schippers, ; Williams and O’Reilly, ). This is listed as the first benefit of diversity in Tables . and .. Van Knippenberg and colleagues () note, however, that the “intergroup biases that may result from social categorization” can disrupt what they call the “elaboration of task-relevant information and perspectives” that is required to accrue the creativity and decision-making advantages associated with diversity in groups. Thus, not all diverse groups will be able to capitalize on their potential for creativity and high-quality decision-making. There is also some evidence that the presence of a minority group on a team, whether on visible or less visible but known attributes (e.g. functional background), can cause members of the group to anticipate differences, and therefore to think more deeply (Sommers, ) and to exert more effort on a task (Carter and Phillips, ) (benefit # in Tables . and .). The benefit of enhanced effort and of the potential for enhanced surfacing of unique information on a team is even more likely if its members feel comfortable interacting with each other, as there is evidence that the mere articulation of an authentic minority opinion on a team can cause more thoughtful deliberation (Nemeth, ). Phillips (, ) further argues that when the disagreement is articulated by a “socially different person, we are prompted to work harder.” That is, “diversity jolts us into cognitive action in ways that homogeneity simply does not” (Phillips, , ). Relatedly, there is some evidence that teams that are more diverse may engage in higher levels of what is called “team reflexivity” (see Van Knippenberg and Schippers, ), which captures the idea that team members will be more likely to engage in a process of self-examination. Team reflexivity has been positively associated with subsequent team performance (West, ). The argument for why differences in perspective and enhanced effort might, in turn, enhance an organization’s CSR activities stems from the idea that this diversity of perspectives is likely to introduce a wider variety of perspectives on CSR than on a more homogeneous TMT or board and may heighten the group’s attention to aspects of CSR that would not be considered on a more homogeneous team, such as creating more opportunities for racial/ethnic minorities and women. The research on the extra effort created by having a minority opinion also suggests that the organization’s CSR activities might receive more careful and comprehensive consideration. Theoretically, then, diverse teams that exert more effort towards CSR activities and are able to capitalize on their diverse sources of knowledge should be able to perform in a more thoughtful way on a range of CSR-related goals. The presence of diversity on a TMT or on a board of directors can also signal the presence of opportunities for individuals who belong to under-represented and visible categories. The presence of a high percentage of women on a TMT or on a board, for example, can signal that the organization is one that provides equal opportunities for women to be promoted or to occupy the highest decision-making positions in an organization (see benefit # in Tables . and .). The presence of diversity in visible positions can attract newcomers who want to work for an organization in which they believe that they will be granted opportunities (see benefit # in Tables . and .). This

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would enhance the organization’s likelihood of making progress towards the achievement of the United Nations SDGs , , , and  (see Table . for a review of the SDGs). In addition, the presence of visible diversity in key decision-making roles could also signal that an organization takes its corporate social responsibilities seriously, which in turn, has been found to be attractive to new recruits (Burbano, ; Gardberg and Fombrun, ; Glavas and Piderit, ; Glavas and Godwin, ; Jones, ; Jones et al., ; Turban and Greening, ). Another benefit of diversity is that a diverse group is likely to have a more diverse set of network ties than a less diverse group (Ancona and Caldwell, ; Carter and Phillips, ; Milliken and Martins, ; Van Knippenberg et al., ), thereby potentially connecting an organization to a more diverse set of stakeholders (listed as benefit # in Tables . and .). Milliken and Martins (, ) argue that: “diversity may allow a group to better fulfill any boundary-spanning role it might have as well as to manage relations with the outside constituents on whom the group depends for resources, information, and/or acceptance (Ancona and Caldwell, ).” This might be true both within a stakeholder group (e.g. the presence of minority board members may increase the likelihood of the firms being connected to minority-owned businesses and to minority investors) as well as in terms of the breadth of types of stakeholders to which the firm is exposed (e.g. new communities of potential buyers for their products). This suggests that a diverse TMT might be better connected to its stakeholders and thus, achieve higher levels of CSR performance on all of the SDGs listed in Table .. In addition, there is evidence that the experience of women and minorities at lower levels of an organization has been found to be affected by the degree to which their type is present at higher levels of the organization (see benefit # in Tables . and .). People at lower levels of an organizational hierarchy, thus, have been found to behave differently when they perceive that they have access to power and opportunity, as compared to when the organization seems less supportive of their advancement (Ely, ; Kanter, ). Women, for example, have been found to be more supportive of each other at lower levels in organizations when there is a higher percentage of women in the upper echelons of the organization (Ely, ). This advantage of diversity would enhance an organization’s movement towards making progress on SDGs , , and . An additional case to be made for the importance of having diversity in organizations at all levels of the organizational hierarchy is that it is the right thing to do—to provide opportunity in a non-discriminatory way for all types of individuals (SDG ). The “right thing to do” argument is an ethical one and one that considers outcomes not only at the organizational level of analysis, but also at the societal level of analysis. Other potential benefits that accrue to societies from having organizations that provide opportunities to a more diverse set of people on important visible dimensions of diversity include: . providing jobs to women and other poorly represented ethnic and racial groups in the society and more opportunity for inclusion in the economic system (SDGs , , , and ),

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. reducing income inequalities that exist across racial, ethnic, or gender-based lines in the society (SDGs , , , and ), . increasing social welfare by reducing the stressful experiences associated with being discriminated against (SDG ), and . reducing the potential for persistent inequalities in a society (SDG  , , and ).

Potential difficulties/costs associated with diversity in a group or organization One cannot responsibly discuss the advantages of diversity, however, without being cognizant of the potential difficulties associated with having diversity in a group or other social entity. These potential difficulties or costs associated with managing diversity are listed in the right-hand column of Table .. The most commonly cited disadvantage that heterogeneous groups have in comparison to homogeneous groups has to do with the categorization dynamics that can occur when there are visible differences between group members. According to social categorization theory, people tend to sort other people into categories based on visible attributes of a person (e.g. gender, race, age). According to social identity theory, people tend to prefer to interact with people whom they perceive to be similar to themselves (Brewer and Brown, ; Tajfel, ) because they have shared experiences and because it can be reinforcing of their own identity. This can create an “in-group” versus “out-group” dynamic in teams that are diverse with respect to visible variables like race and gender that, in turn, can reduce communication and increase conflict, perceived and actual bias, and dissatisfaction (Carter and Phillips, ; Harrison et al., ; Pfeffer, ). Van Knippenberg and colleagues () made the important point that the categorization of people by itself is not necessarily problematic. It only becomes problematic if this type of sorting results in negative affect or bias towards one of the categories or sub-groups. Differences between team members that are not visible are less likely to lead to categorization dynamics because they are not immediately obvious, but they can be associated with disagreements, conflict, and miscommunications. In fact, another potential disadvantage associated with diversity in groups actually stems from one of the things that is, in fact, an advantage for diverse groups: the differences in perspectives that are likely to be associated with being different on an important variable. If not handled properly, such differences in perspectives on a task or an issue could lead to miscommunication or conflict in the group (Jehn, ). A meta-analysis of the empirical literature on the effects of conflict shows that both relationship-based and task conflict in a group tend to have a negative relationship with group performance (De Dreu and Weingart, ). This conflict may be especially problematic if the group is one that has “faultlines” (Lau and Murnighan, ); that is, divisions within a group where multiple differences align with each other to create sub-groups that are similar to each other on more than one variable.

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 . 

Numbers and proportions matter (Kanter, ) in predicting the impact of being in a minority group on an individual, as well as on the influence that a minority group can have on a majority group. There is a large literature on the negative effects of being a token, both on the individual herself (Kanter, ), as well as on her likelihood of being able to have influence. Minorities are likely to have more stressful experiences when they are tokens (Kanter, ; Konrad et al., ). Further, minorities are less likely to be able to influence a group’s decisions when there is only a single token minority member at the table, as compared to there being multiple members. The differences in perspective that are created by having members of a group who are different from one another on important variables become even more complicated when these differences are associated with differences in power or status in the organization or in society (Ely and Thomas, ; DiTomaso et al., ). If power in the organization is correlated with gender, race, ethnicity, or some other important category of difference (e.g. functional background), then there may be a suppression of speech effect that could occur, such that people in the minority on TMTs and boards feel less comfortable expressing their opinions than majority group members do. People who are perceived to be low in status or power are also less likely to be listened to when they speak. Thus, one of the barriers to realizing the benefits of diversity in a group is the presence of process losses due to power or status effects (Konrad et al., ). That is, low-status members of a group or taskforce will not necessarily feel comfortable speaking up about their issues or concerns (Morrison and Milliken, ) and may not be listened to when they do speak up. In her study of US senators, Brescoll () found that women spoke less than men, even controlling for their level of power within the Senate, in part because they feared a backlash from men if they spoke too much. Thus, being seen as too assertive is viewed as inconsistent with gender stereotypes. This fear of male backlash may be even stronger, and suppress speech even more, when women tend to be clustered at lower levels of the organization.

Moderating Factors A key question in the literature on team diversity is: What are the variables that influence whether diversity will have largely positive effects or largely negative effects? At the team level, the processes used in the early phases of a group’s life (Milliken et al., ), the diversity perspective adopted by the group and the organization in which it is embedded (Ely and Thomas, ), and the “diversity mindset” of the team (van Knippenberg and Schippers, ) are likely to be important determinants of how diversity will be experienced. Further, the types of diversity that are represented and the proportions of each type (Kanter, ), as well as the nature of the context (e.g. how much diversity exists in the overall organization), are also likely to be important factors that influence a group’s outcomes (Kochan et al., ; Lawrence, ; Martins et al., ). It is also important to note that the effects of diversity are likely to change over the lifetime of a group (Harrison et al., ; Lawrence, ; Milliken et al., ;

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Srikanth et al., ; Watson, Kumar, and Michaelsen, ). A team that manages its diversity well from the start of its interactions is much more likely to benefit from the potential advantages that diversity can bring to the team. At the organizational level, the pursuit of simple numerical goals for visible forms of diversity is not likely to result in realizing any of the benefits, other than possibly better recruitment and some of societal benefits in the short term. However, if the experience of women and minorities is known to be a stressful one, or if members of the majority group become resentful, these benefits will be short-lived. If the integration of minorities and women into the organization does not go smoothly and minorities and women do not feel supported or valued, if the majority group feels threatened, if a diversity-valuing culture is not created, and if minorities and women are not paid fairly and do not advance at equal rates up the organizational hierarchy, then there is the potential for dissatisfaction, for high levels of turnover, and possible societal disillusionment. Achieving long-term and deep benefits requires an ongoing and deeply held commitment to managing diversity effectively and to creating group and organizational cultures that value diversity (Ely and Thomas, ; Kochan et al., ). At the top levels of an organization, managing diversity effectively may also depend on the presence or absence of shared goals (Van Knippenberg et al., ). Further, how much diversity in the upper echelons matters may depend on characteristics of the organizational context in which the team is operating (e.g. the characteristics of the industry, the amount of discretion TMTs and boards have to affect the organization’s strategic and CSR-related moves) (see e.g. Hambrick and Finkelstein, ).

T P E  S T  D  C

.................................................................................................................................. In the prior section, I focused on some of the potential general effects of diversity in the upper echelons of an organization on CSR (as operationalized by the likelihood of making progress towards the accomplishment of the United Nations sustainable development goals). In this section of the chapter, I focus on the effects of specific different types of diversity so as to offer some thoughts as to how and why each type of diversity might be related to aspects of a firm’s corporate social performance. I will use the list of benefits of diversity that are outlined in Tables . and . to try to capture the specific nature of the advantages that each type of diversity might offer.

Gender Diversity Gender diversity is probably the most commonly studied form of diversity when it comes to exploring the link between diversity in the upper echelons of organizations and aspects of an organization’s performance. A recent meta-analysis found, for example,

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that female board representation was positively related to a firm’s accounting returns and to the quality of the board’s monitoring performance as measured by variables such as the frequency and length of board meetings (Post and Byron, ), which could be argued to be a measure of the degree of effort put into the board’s monitoring function (see benefit # in Table .). Having women as members of the executive team also appears to be associated with enhanced financial performance as measured by return on assets (Grant Thorton, ), as well as with enhanced CSR (Bear et al., ). Bear et al. (, ) noted that firms with a higher percentage of female board members “have a higher level of charitable giving” (Wang and Coffey, ; Williams, ), more favorable work environments (Bernardi et al., ; Johnson and Greening, ), and higher levels of environmentally focused CSR (Post et al., ). Further, Bear et al. () found support for the hypothesis that certain types of CSR mediate the relationship between the percentage of women on the board and reputation (Bear et al., , ). That is, firms with a higher percentage of women on their boards may have enhanced reputations, in part, because firms with more women at the top have higher levels of CSR performance. As previously mentioned, and as stressed in other chapters of this book, research suggests that job searchers are attracted to firms that they perceive have high levels of CSR (Gardberg and Fombrun, ; Glavas and Piderit, ; Glavas and Godwin, ; Jones, ; Jones et al., ; Turban and Greening, ). Thus, to the extent that female representation on TMTs and boards is associated with enhanced CSR, then it should also be indirectly associated with increased attractiveness to job applicants. There may also be a direct effect of observation of women on the TMT or board on the ability of organizations to attract more women and minorities to their workforce. This may occur because females and others who are in minority groups and who have the opportunity to observe diversity in the upper echelons may believe that they will have more opportunities for advancement in these organizations than in organizations where the power structure appears to be dominated by white men (see benefit #). It could also lead to a larger talent pool to choose from (see benefit #) and to a better experience for women and minorities at lower levels of the organization (see benefit #), in part because there is less of a fear of “backlash” occurring when women and minorities express their opinions. Further, there is also some evidence to suggest that women may tend to put in more effort on boards (Huse and Solberg,  as cited in Post and Byron, ) (see benefit #) and may tend to be more democratic in their leadership orientation in general (e.g. Eagly and Chin, ; Konrad et al., ). This could lead to a heightened consideration of opinions from a more diverse set of people (whether on the board or TMT itself). As women gain more influence, it might also result in changes in the governance structures throughout the organization (e.g. more opportunities for employee participation in decision-making through the creation of taskforces, and so forth; see benefits , , , and  in Table .). As previously mentioned, an important thing to keep in mind in evaluating the benefits of any type of diversity on CSR is that simply having token representation of

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women or any other minority group on boards and in top management is likely to be insufficient (Konrad et al., ). Konrad’s work with her colleagues (Konrad et al., ), for example, shows that there is a significant difference in the quality of boards when women reach a critical mass of three or more members of the board. Similarly, the findings of a study by Bear and co-authors of health care companies (Bear et al., , ) “indicate that as the number of female directors increases, so does the firm’s CSR, suggesting that the contributions women bring to the board in this area are more likely to be considered by the board when the group diversity dynamics move away from tokenism.” Presumably, this finding has to do with the degree to which women feel comfortable participating in the discussions and contributing their perspectives, but the exact mechanism is not known.

Racial, Ethnic, and Cultural Diversity The effects of racial, ethnic, and cultural diversity have been studied less often than gender diversity at the highest level of organizations (e.g. TMTs, boards of directors). One reason may be the relative scarcity of racial and ethnic minorities in top management and on boards in the United States. Recent data suggest that minorities hold about  percent of all board seats in Fortune  companies (Deloitte, ). Note that this includes all minorities including Asians, Pacific islanders, Hispanics, and Black Americans. Black Americans hold . percent of board seats in Fortune  companies according to recent data (Deloittte, ). There is reason to believe that many of the positive effects of having gender diversity in the upper echelons of organizations would generalize to having racial and ethnic diversity. For example, having minorities on the organization’s board of directors and TMTs ought to act in the same way as having women in those positions does in terms of the symbolic benefits. That is, job applicants and other stakeholders who are members of visible minority groups may feel more positively inclined towards participating with organizations that have made visible progress towards diversifying the racial/ethnic composition of their management teams and boards (see benefit #). So, in this sense, the racial/ethnic diversity of TMTs and boards is likely to be positively associated with measures of CSR that include the racial/ethnic diversity of the workplace (see benefit #) or of the vendor base (see benefit #). In a finding that is somewhat supportive of this idea, Kochan et al. () found that racial diversity was positively associated with growth in the business portfolios of the branches of a financial services firm. The mechanisms at play here could include having more information about minority group individuals with relevant skills and capabilities that is acquired through networks of minority group members (Roberson and Park,  or stronger affiliative connections with similar others in the community (see benefit #). Similarly, there may be a direct connection between the percentage of minority board members and other specific indicators of CSR, such as charitable giving and

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more favorable work environments for minorities. One underlying mechanism here would presumably have to do with the sensitivity of minorities to ensuring that other minorities felt equitably compensated and fairly treated within the organization (benefits # and #). The level of likely influence of minorities on these types of decisions will vary, however, with the proportion of representation (Kanter, ; Roberson and Park, ). To the extent that racial/ethnic diversity in the upper echelons of organizations will be related to greater racial/ethnic diversity in an organization, then one could argue that the negative dynamics associated with categorization and stereotyping dynamics based on race in the organization could be ameliorated. Individuals in more racially diverse organizations are likely to have more contact with people who are different from themselves in terms of race or ethnicity (Brewer and Kramer, ), thereby reducing the likelihood of stereotyping (Austin, ; Baugh and Graen, ; Martins et al., ; Milliken and Martins, ). Another underlying mechanism might be an increase in empathy of majority group members for minority group members that is created by the increased contact with minority group members of equal status. Further, members of various visible minority groups may feel that they can speak up more when they can see people like themselves at the top of the organization (see benefit #). Further, to the extent that racial and ethnic diversity are associated with important differences in perspectives or experiences that can enrich the information and ideas available to important decision-making groups in the organization (Roberson and Park, ), then companies with greater racial representation on their boards should have the potential to surface more perspectives and to make higher quality decisions (see benefit #). Moreover, they may exert more effort on their tasks because of the felt need to work harder to reach agreements (see benefit #). However, the effects of racial diversity on a team’s performance are likely to vary. Ely and Thomas (, ) noted that “women and people of color may well bring different perspectives and styles to the workplace, but research has yet to demonstrate whether, under what conditions, and with what consequences they actually express them.” They went on to study this issue and found that the level of comfort in speaking up with differing perspectives depended on what Ely and Thomas () referred to as the team’s diversity perspective. Only teams with what they called an “integration-andlearning perspective” were able to really use their cultural or racial diversity to their advantage in terms of achieving a high level of team functioning. Ely and Thomas (, ) describe the integration-and-learning perspective as occurring when cultural diversity is seen as “a potentially valuable resource that the organization can use, not only at its margins, to gain entree into previously inaccessible niche markets, but at its core, to rethink and reconfigure its primary tasks as well. It is based on the assumption that cultural differences give rise to different life experiences, knowledge, and insights, which can inform alternative views about work and how best to accomplish it.” Katherine Phillips and colleagues (Carter and Phillips, ; Phillips, ), however, have suggested that there may be effort-related advantages of racial diversity that accrue to teams even if minority group members have not spoken up, because the

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majority group members will work harder on their tasks in anticipation of encountering differences in perspectives in the discussion (benefit #).

Age Diversity One of the arguments for studying the effects of age-related diversity is that the workforces of many countries around the world are increasingly inter-generational (North and Fiske, ) even if TMTs and boards are generally not. Another argument is that different age cohorts within an organization may have different skill sets and knowledge repertoires (e.g. millennials have more experience with social media than older workers), which could be important in contributing to high-quality decisionmaking. Thus, TMTs and boards with more age diversity may be more likely to have a diverse set of perspectives, skills, and knowledge from which to draw, as compared to more homogeneous teams or boards (see benefit #). It is also possible that age diversity on a team has benefits in terms of the breadth of communication with individuals outside the team, both inside and outside the organization (benefit #). Zenger and Lawrence (, ) note that age similarity on a team may “reduce the diversity of contacts outside the group and thereby negatively affect project performance”. The same logic would seem likely to hold for the attraction of talent (see benefit #). However, there is considerable evidence that people may prefer to interact with people who are similar in age because they are more likely to have shared common experiences (e.g. a common set of life-stage experiences, a common set of historical and possibly cultural experiences, and so forth). This common set of experiences makes communication easier and can work to create a sense of shared identity (Lawrence, ; Pfeffer, ; Zenger and Lawrence, ). In their study of TMTs, not surprisingly, Wagner and colleagues () found that age diversity was positively related to turnover, and that the individuals who were least similar in terms of age were most likely to leave. Consistent with these findings, a recent meta-analysis reported overall negative consequences of age diversity on team performance (Joshi and Roh, ). More research is clearly needed on age diversity and its potential advantages and disadvantages for the functioning of teams and organizations.

D-L D

.................................................................................................................................. Whether and how deep-level diversity affects a company’s CSR performance is an understudied question (Bear et al., ). One of the things that makes this question so difficult is that there are so many different types of diversity that are at least initially invisible. For example, there is diversity in industry background, functional background, and education, which are sometimes studied. There is also diversity in

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childhood socio-economic status, sexual orientation, religion, and values, which also may have significant effects but are rarely, if ever, studied. Clearly, the types of invisible diversity that are associated with different types of expertise and perspectives on organization problems (e.g. functional background diversity, educational background diversity) ought to be relevant to enhancing the number of perspectives and the range of information considered (see benefit # in Table .). Consistent with this idea, Smith and colleagues () found that heterogeneity in education and functional backgrounds within a TMT was associated with higher levels of financial performance for firms. Bantel and Jackson () also found that functional diversity on TMTs can enhance team innovation through the generation of alternative solutions and innovation. To the extent that enhanced financial performance and innovation reflect a more comprehensive understanding of the issues in the environment by the TMT, then one might hypothesize that functional and educational heterogeneity would be related to higher levels of CSR through the logic of enhanced awareness of trends in the environment (see benefit # in Table .). Goll et al. (), in fact, hypothesized that heterogeneity of the TMT in terms of education and functional background would be positively related to CSR. They did not, however, find empirical support for their prediction. Bear et al. () argued that diversity in background and business experience ought to enhance the board’s understanding of a firm’s external environment (see benefit #), as well as provide enhanced network connections and, potentially, enhanced legitimacy with external audiences (see benefit #). However, they did not find significant relationships between director diversity and CSR performance as measured by KLD ratings in their study of health care companies. Johnson and Greening (), however, found that the presence of outside directors on a board was positively related to corporate social performance on both the people and the product quality dimensions, a finding that suggests that outsiders may be more willing to consider the needs of a wider variety of stakeholders’ interests (see benefits  and  in Table .) and not just those of shareholders (Zahra and Pearce, ). This result suggests that corporate social performance may be well-served by having a mix of inside and outside directors. Clearly, much is unknown about the nuances of the effects of the many types of less visible forms of diversity on top management and board performance, and more research is needed.

T P E  C  W D

.................................................................................................................................. In the prior section, I examined whether and how various types of diversity on a TMT or board of directors might influence an organization’s CSR-related activities and performance. I specifically used the “lens” of an organization’s potential performance on variables that would reflect progress towards the United Nations sustainable

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development goals. In this section, I examine how a firm’s CSR performance might facilitate its ability to successfully hire and integrate people from different backgrounds into the organization. It seems logical that organizations that elect to take CSR seriously would be more likely to take the need for workforce diversity seriously as well. For example, organizations that elect to file sustainability reports and report on dimensions advocated by bodies like the Global Reporting Initiative (GRI) ought to evolve over time to have more gender and racial diversity at all levels, as compared to their counterparts in the same or similar industry and regional contexts. The most obvious reason is that the GRI and many other of these standard-setting organizations (e.g. ASSET, MSCI) have standards that require reporting on dimensions of diversity, such as the number of women in top management positions or on boards. Simply having to report on such indicators is likely to raise top management’s consciousness about the importance of gender and other types of diversity at all levels of the organization and encourage organizations to seek to improve on these dimensions relative to their past, and relative to their peers. The public nature of the practice of external reporting is also likely to create pressure to score well. Further, as has been discussed, the United Nations sustainable development goals, which many large organizations have signed on to support, include at least five specific goals related to increasing the inclusiveness of economic opportunity and increasing gender equity. Another reason why firms with higher levels of CSR may have more diverse workforces is that they are seen as more attractive organizations to work for, as compared to organizations that do not take CSR seriously. As previously discussed, potential employees are attracted to working at firms with good reputations for environmental and social performance (Burbano, ; Gardberg and Fombrun, ; Glavas and Piderit, ; Glavas and Godwin, ; Jones, ; Jones et al., ; Turban and Greening, ). It may also be true that organizations that are perceived to be socially responsible will be especially attractive to female and minority job applicants who might assume that these organizations are more likely to have values that are consistent with their own, and that they may have greater opportunities for success in these organizations. But simply attracting and hiring more women or more members of racial and other types of minority groups does not necessarily mean that these individuals will feel that they have equal opportunities for participation, influence, and advancement. One reason why organizations with high levels of CSR might do a better job of providing opportunities for voice, influence, and advancement to people who are different could be that such organizations will be more aware of justice-related concerns (Rupp et al., ), such as implicit bias and wage and promotion inequities, and thus more open to developing programs that advance minorities. Another reason why minorities and women might feel that they have more voice opportunities in organizations with high levels of performance on social responsibility is that these organizations may seek more feedback from their stakeholders, especially their employees, as called for by some of the standard-setting organizations such as the GRI. In seeking such feedback from

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employees, top managers are more likely to learn about some of the causes of dissatisfaction among their employees. To the extent that they take this feedback seriously and act on it, they are likely to make more progress towards providing equal opportunities for advancement and for influence through participation.

C

.................................................................................................................................. Specifying the effects of team-level or workforce diversity on individual employees, teams, and the organization itself is extremely complex because there are so many types of diversity and so many potential moderator variables that can affect the outcomes achieved by these groups—both in terms of member satisfaction and in terms of quality of the outputs. Nevertheless, there is reason to believe that diversity in the upper echelons of an organization ought to be positively connected to greater sensitivity to certain types of CSR issues (e.g. the need for workforce diversity, attention to pay and opportunity equity, the need for supplier diversity; as well as to an enhanced awareness of the sources of stress experienced by women and minorities and the need for a positive diversity culture). Further, both relational and task-related types of diversity in a group may be related to the surfacing of multiple perspectives, the potential level of effort devoted to the tasks, and the potential for higher-quality decision-making. This, in turn, ought to make more diverse teams more likely to think comprehensively about their environments and to pay attention to multiple constituencies. However, whether individuals have the motivation, power, and capability to push their organization towards better outcomes for people who are different will depend on a number of internal characteristics of that organization, including the proportions of minorities and females at the top (Ely, ; Kanter, ; Konrad et al., ), how well the group manages its diversity, the degree to which the organization has adopted an integration and learning perspective towards diversity (Ely and Thomas, ), and the degree to which the group has shared goals (Van Knippenberg et al., ). When a TMT and board have shared goals, are well managed, have minority members who are not just “tokens,” and adopt an integration and learning perspective, it is more likely that the organization will be perceived by its employees and other evaluators to score high on its diversity management and on other diversity-related CSR goals. It is my hope that this chapter will spark interest in developing our understanding of the micro processes that might connect CSR with organizational diversity. There is clearly much more research that still needs to be done on this very important topic.

A I thank David Waldman for his helpful feedback on an earlier draft of this chapter.

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

 . 

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  ......................................................................................................................

     Employee Externally-Directed Citizenship and Green Behaviors ......................................................................................................................

 . ,  . ,  ,   . 

A ongoing deterioration of global ecosystems (IPCC, ), frequent and public corporate scandals (Hail et al., ), and growing concerns about social, economic, and justice inequities (Young and Tilley, ), organizations are increasingly concerned with ensuring that they operate ethically and in a manner that promotes environmental sustainability and social welfare (Aguinis and Glavas, ; Jabbour and Santos, ; Rupp and Mallory, ). Organizations seek to enhance their social and environmental performance out of general concern for ensuring global welfare, but perhaps more importantly, out of recognition that social and environmental inequities hamper markets and that environmental deterioration threatens access to natural resources that are necessary for organizational operations (Dilchert et al., ; Holme and Watts, ; Ones et al., a). To this end, organizations around the globe have implemented a variety of corporate social responsibility (CSR) initiatives to improve their social and environmental performance (D’Mello et al., ; Ones et al., a; Rupp and Mallory, ) and are increasingly embedding sustainability, social responsibility, and ethics into their core business strategies and practices (Aguinis and Glavas, ; Dilchert and Ones, a; Setó-Pamies and Papaoikonomou, ). A critical insight for evaluating and promoting corporate social, ethical, and environmental performance is that organizational performance is a function of individual employees within the organization acting in ways that contribute to or detract from ethical practices, social equity, or environmental sustainability (Ones and Dilchert, b).

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  



Organizations do not volunteer in their communities, employees do. Organizations do not set ethical policies, leaders and managers do. Organizations do not innovate new sustainable products, designers and engineers do. Thus, understanding the ways that employees act responsibly (or irresponsibly) at work, and what factors contribute to their individual behaviors in relation to organizational CSR, is critical for enhancing organizational social and environmental performance.

I B C T CSR: E R B

.................................................................................................................................. CSR is broadly divided into three dimensions of organizational performance, including the degree to which organizations: () are financially successful while maintaining ethical business practices; () engage with the communities in which they operate and promote social equity, welfare, and justice (both within the organization and in their broader communities and society); and () promote (or at least do not detract from) environmental sustainability (Elkington, /; Rupp and Mallory, ). Although there are multiple definitions of CSR in the literature, the following is relevant to the action-oriented perspective taken in this chapter. Waldman et al. (, ) described organizational CSR as “actions on the part of the firm that appear to advance, or acquiesce in the promotion of some social good, beyond the immediate interests of the firm and its shareholders and beyond that which is required by law.” The general domain of employee responsible behaviors provides the umbrella under which individual (employee) level CSR actions can be organized. Employee responsible behaviors can be defined as those individual-level employee actions that contribute to or detract from organizational performance in each of these areas of organizational responsibility. Applied psychological and organizational research has considered three broad domains of employee responsible behaviors that parallel the tripartite division of CSR at the organizational level: () employee (organizational) citizenship behaviors (OCB; sometimes called employee prosocial behaviors; Brief and Motowidlo, ; Chiaburu et al., ); () employee ethical behaviors; and () employee green behaviors. Each domain has sparked a large literature examining the nature of responsible behaviors by examining their structures, antecedents, and consequences, as well as exploring how organizations can promote employee responsible behaviors. However, although citizenship, ethical, and green behaviors are united in that they all contribute to organizational CSR, they remain distinct behavioral domains. As is the case for CSR at the organizational level (Capelle-Blancard and Petit, ; Gjølberg, ; Oikonomou et al., ), employee responsible behavior is conceptualized as a formative variable (Diamantopoulos et al., ). It reflects the sum of employees’ citizenship, ethical, and green behaviors and is arguably not a meaningful latent

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

. . , . . , . ,  . . 

behavioral construct unto itself. Each of the three domains of responsible behavior are conceptually and empirically distinct. Observed correlations among these responsible behavioral domains are typically in the range of r = .–. (Dalal, ; Houghton et al., ; Lamm et al., ; Paillé and Boiral, ; Robertson and Barling, ). These modest correlations among the three responsible behavioral domains likely emerge because they share several common antecedents (e.g., Conscientiousness [particularly the dependability facet], altruism) and because organizations adopting goals in one CSR domain tend to adopt similar goals in others (Delmas et al., ; Epstein and Rejc, ; Mesmer-Magnus et al., ). However, each domain also has a unique structure, unique measurement needs, and a unique pattern of antecedents. For example, while Conscientiousness and altruism may predict all three domains of employee responsible behavior, Openness is likely to only impact green behavior because of the innovative and adaptive behaviors involved in the domain, Emotional Stability to primarily contribute to ethical behavior because of behavioral control necessary to behave in even-tempered (nonvolatile) ways, and Extraversion to mostly affect prosocial/ citizenship behavior because of the comfort with interpersonal contact necessary to approach and work with other individuals. Finally, each responsible behavior domain may be associated with distinct organizational outcomes (Orlitzky et al., ) and may respond to different forms of incentives and interventions (Wiernik et al., b). In this chapter, we focus on two areas of employee responsible behavior that are directed externally toward promoting social and environmental goods—employee green behaviors and externally-directed citizenship behaviors (OCB-X). These two areas have received comparatively less attention in applied psychological and organizational research than ethical behavior or internally-directed OCB (i.e., OCB directed toward other employees, the organization itself, or the employee’s work). Employee green behaviors concern employees’ contributions to (or detractions from) environmental sustainability (Ones and Dilchert, a); they are the focus of a rapidly growing literature that nevertheless remains isolated from broader models of employee job performance. OCB-X include actions such as employee community volunteering and charitable giving. These behaviors are also typically studied in isolation, rather than as a component of overall employee performance. In this chapter, we describe each domain, review their proposed structures, highlight available measures, and discuss established and possible individual differences antecedents. We direct readers who are interested in conceptualization, measurement, and prediction of employee responsible behavior broadly to Wiernik et al. (b), who discuss the conceptual similarity of OCB-X to other OCB and present a synthesized Consensus Taxonomy of Organizational Citizenship Behavior (CT-OCB) that includes OCB-X as one of the four major OCB aspects, alongside individually-directed, organizationally-directed, and proactive OCB. We further direct readers to Wiernik and Ones (), who present a parallel discussion of employee ethical behaviors and their position in the Consensus Taxonomy of Counterproductive Work Behavior (CT-CWB).

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  



CSR-Related Employee Behaviors as Job Performance Parallel to definitions of job performance (Campbell and Wiernik, ; Viswesvaran and Ones, ), employee actions impacting CSR must be defined in terms of individual-level employee behaviors, not their antecedents or outcomes. That is, we maintain that conceptualizing and measuring employee responsible behaviors must focus on the behavioral acts themselves, rather than on the context in which they are performed (such as the presence or absence of norms; Ones and Dilchert, a), the traits or motives that drive them (cf. Clary and Snyder, , ; Grant and Mayer, ; Snyder and Dwyer, ), or their consequences (e.g., an employee’s carbon footprint; Dilchert and Ones, b). By focusing on actual behavior, one excludes outcomes that are outside of individual control and avoids conflating behaviors with motives, potentially limiting the range of antecedents and interventions that organizations consider as methods to promote responsible performance. It is critical for researchers to recognize that employee responsible behaviors are part of employees’ overall job performance, defined as scalable actions and behaviors employees engage in that contribute to or detract from legitimate organizational goals (Campbell, , ; Viswesvaran and Ones, ). Campbell and Wiernik () outline an eight-dimensional consensus model of job performance behaviors that describes the major performance factors present in all jobs, industries, and contexts, and that encompasses the full range of proposed performance constructs from applied psychological and organizational research. This model is illustrated in Figure .. Employees’ responsible behaviors are not separate from job performance but form an integral part of employees’ overall contribution to organizational goals in contemporary economies. They may or may not be voluntary, discretionary, extra-role, or unrewarded (cf. Organ, ; Vey and Campbell, ). In the sections to follow, we consider how externally-directed citizenship and green behaviors each intersect with general job performance factors. These individual (i.e., employee-level) performance domains underlie organization-level CSR. We take up each in turn.

E-D E C B

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Definition of Externally-Directed Employee Citizenship Behaviors Integrating a variety of previously proposed definitions and conceptualizations, Wiernik et al. (a) defined organizational citizenship behaviors as “scalable actions and behaviors that employees engage in that maintain or enhance the social and psychological context of an organization and include behaviors the contribute to

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

. . , . . , . ,  . . 

Technical/Task Performance

Job-, Knowledge-, and Skill-specific dimensions

Communication Avoiding Counterproductive Work Behavior [CWB] Employee Ethical Behavior Effort, Initiative, Persistence

Employee Green Behavior

Hierarchical Leadership Employee (Organizational) Citizenship Behavior [OCB]

Peer Leadership Hierarchical Management Peer Management

 . Black ellipses are Campbell and Wiernik’s (2015) eight job performance factors. Blue ellipses are the Big Three performance factors described by Viswesvaran and Ones (2000). Green rectangles are employee responsible behavior domains. Employee (organizational) citizenship behavior is a higher-order factor above Campbell and Wiernik’s leadership, management, and effort/initiative factors. Employee ethical behavior is a sub-category within avoiding counterproductive work behavior. Employee green behavior can connect with any of Campbell and Wiernik’s eight performance factors; it is a compound performance factor encompassing all employee behaviors that impact environmental sustainability. Source: From Wiernik et al. (2018b). Reprinted with permission.

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  



the well-being of the organization, its members, its clients, members of the broader community, or other stakeholders.” Citizenship behaviors are distinguished from technical/task performance in that, rather than directly contributing to an organization’s core technical functions of producing and providing goods and services, citizenship behaviors support these core functions by enhancing the well-being of individuals, the quality or efficiency of the organization itself, or the features of the context in which the organization operates (Borman and Motowidlo, ; Chiaburu et al., ; Organ, ). Citizenship behaviors contribute to organizational goals by enhancing or supporting the organization’s ability to fulfill its core technical functions. Most OCB research has focused on OCB that is directed internally toward the organization itself and its members (e.g., helping a coworker, giving extra effort, persisting through difficulty, voicing innovative ideas, representing the organization well; Borman and Motowidlo, ; Organ, ). Much less attention has been given to OCB directed externally toward clients and the broader community (e.g., going out of one’s way to help a client, workplace charitable contributions, corporate volunteering activities; Bettencourt and Brown, ; Leslie et al., ; Pelled et al., ; Rodell et al., ). Literatures on these two foci of employee citizenship behaviors have developed almost entirely separately. However, both forms of OCB share the underlying features of enhancing the well-being of other persons or institutions, and they are best conceptualized as part of the same hierarchical construct domain (Wiernik et al., a). Like internally-directed OCB, externally-directed OCB (OCB-X) are not necessarily discretionary, unrewarded, or extra-role (Borman and Motowidlo, ; Campbell and Wiernik, ; Organ, ; Rotundo and Sackett, ; Vey and Campbell, ). OCB-X may or may not be required, and they may or may not be a core part of an employee’s formal job responsibilities (e.g., an employee for a charitable organization may perform lobbying/advocacy behaviors as the major component of their job tasks). OCB-X is defined behaviorally as interpersonal employee behaviors that directly benefit persons outside the organization. Such behaviors are conceptually similar to the individually-directed (OCB-I) aspect of internally-directed OCB, but OCB-X behaviors are directed at persons outside the organization, rather than at coworkers or other persons inside the organization. OCB-X contribute to organizational success by enhancing the broader social context in which an organization operates. We propose an initial taxonomy of OCB-X facets below.

Facets of Externally-Directed Employee Citizenship Behaviors OCB-X facets are typically investigated in separate studies; to our knowledge, this chapter is the first attempt to organize them as components of a broader construct. Based on a review of existing research on the micro-foundations of organizational CSR and related behaviors, we distinguish five OCB-X facets (see Table .). Client-directed

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. . , . . , . ,  . . 

Table 6.1 Facets of Externally-Directed Organizational Citizenship Behavior (OCB-X) Category

Description

Externally-directed OCB (OCB-X)

Interpersonal employee behaviors that directly benefit persons outside the organization

Client-directed OCB

Providing exception levels of effort to serve or benefit a client, customer, or other external organizational stakeholder (e.g., identifying additional suppliers that can meet unique customer requirements; trying to find alternative methods for accommodating a customer; persisting in working with a challenging customer for a long period; sending greetings to customers on birthdays or other significant events). Also called customer-oriented prosocial behavior (Pelled et al., 2000) and prosocial service behaviors (Bettencourt and Brown, 1997).

Employee volunteering

Organization-supported giving of time during a planned activity for an external nonprofit/charitable group, organization, or cause; also includes providing pro bono services (cf. Rodell et al., 2016). Also called corporate volunteering (Jones, 2016; Jones and Rupp, 2018).

Employee charitable giving

Organization-supported giving of money or goods to an external nonprofit/ charitable group, organization, or cause (cf. Leslie et al., 2013; Rodell et al., 2016)

Community education/social marketing

Producing or disseminating information or materials to educate, inform, or encourage beneficial behavioral change among external organizational stakeholders (e.g., providing energy reduction tips to community members).

Advocacy/lobbying

Promoting policies or actions to decision-makers that benefit external organizational stakeholders on their behalf (e.g., writing an organizational position statement supporting family leave legislation; advocating for better resource access for disabled students to administrators or governments).

OCB (also called prosocial service behaviors, Bettencourt and Brown, ; service-oriented OCB, Bettencourt et al., ; or customer-oriented prosocial behavior, Pelled et al., ) is the OCB-X facet that is most similar to internally-directed OCB. It refers to providing exceptional levels of effort to serve or benefit a client, customer, or other external organizational stakeholder. Examples of client-directed OCB behaviors include going out of one’s way to identify additional suppliers that can meet unique customer requirements, persisting in working with a challenging customer for a long period, and sending greetings to customers on birthdays or other significant events. The construct of customer-directed prosocial rule breaking (e.g., going around bureaucratic procedures to help a customer get benefits faster; Morrison, ; Vardaman et al., ) is also a form of client-directed OCB, although if such behaviors harm the organization or its stakeholders, they would also be counterproductive work behaviors (Ones and Dilchert, a). Client-directed OCB can be distinguished from customer service aspects of technical/task performance (cf. Campbell and Wiernik, ) in the same way that the extraordinary effort facet of proactive OCB is distinguished from

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

broadly defined technical/task performance. Client-directed behaviors reflect actions that far exceed requirements to a degree that they reflect a difference in kind rather than merely performance at a high level (cf. Somech and Drach-Zahavy, ). Clientdirected OCB have been studied primarily in the context of salespersons and customer service employees (e.g., Bettencourt and Brown, ; Bettencourt et al., ; Pelled et al., ), but also in the context of health care (Irvine, ) and education employees (Somech and Drach-Zahavy, ). Other OCB-X facets reflect employee participation in various types of organizational CSR programs. Employee volunteering refers to employees giving their time as part of an organization-supported planned activity for the benefit of an external nonprofit/ charitable group, organization, or cause (Rodell et al., ). Employee volunteering programs (also considered chapter , Corporate Volunteering: Who Really Wins? in this Handbook) can be directly planned by the organization or simply receive more tacit organizational support (e.g., allowing employees to spend work time planning an event, providing resources or space for an event). Employee volunteering can occur both inside and outside the workplace, as well as during work hours or off-time. The key factor that distinguishes employee volunteering from general life volunteerism is that the activity is supported by the organization, and employees participate in their capacity as organization members. Employee volunteering also includes providing pro bono services (e.g., an accountant providing pro bono tax preparation to nonprofit groups). Employee volunteering is distinguished from employee charitable giving in that the former involves giving of time, whereas the latter reflects a more passive form of participation involving the giving of money or goods (cf. Leslie et al., ; Rodell et al., ). Employee behaviors to implement other types of organizational CSR initiatives (e.g., Lee and Kotler, ) can further be considered forms of OCB-X. For example, community education/social marketing behaviors are employee actions that are aimed at producing or disseminating information or materials to educate, inform, or encourage beneficial behavioral change among external organizational stakeholders (e.g., helping community members to make plans to use composting facilities). Advocacy/ lobbying behaviors are employee actions that are aimed at promoting policies or actions to decision-makers that benefit external organizational stakeholders on their behalf (e.g., writing an organizational position statement supporting family leave legislation; advocating for better resource access for disabled students to administrators or governments). We offer these five categories as a preliminary taxonomy of externally-directed organizational citizenship behaviors. Many basic questions about their nature and dimensionality remain. For example, should client-directed OCB be divided into more specific facets? Should participation in activities such as organization-sponsored blood drives be considered as forms of employee volunteering, employee charitable giving, or another category entirely (cf. Houston, )? We also acknowledge that there are potential conceptual overlaps among our proposed OCB-X categories. For example, depending on the nature of employees’ jobs, advocacy and education OCB-X may also be a form of technical/task performance or client-directed OCB (e.g., Bemak

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

. . , . . , . ,  . . 

and Chung, ; Farquhar et al., ; Pinto-Foltz and Logsdon, ; Tilbury and Wortman, ; cf. Grant, ). More basic taxonomic research on the nature and types of behaviors that employees perform that benefit external organizational stakeholders are needed, as are studies examining the interrelations among OCB-X facets, other dimensions of OCB, and job performance.

Measuring Externally-Directed Employee Citizenship Behaviors Measurement is a major challenge for OCB-X research and practice. Single-item measures are common (e.g., participation in organizational volunteering or charitable donation programs; Leslie et al., ; Rodell et al., ), and many multi-item scales are vaguely worded and lack content specificity. For example, Bettencourt and Brown () presented a widely used five-item scale for measuring the client-directed OCB facet of OCB-X, but this scale merely refers to employees assisting customers “beyond job requirements.” The items describe no specific behaviors that reflect extraordinary levels of effort or customer service, and the scale shows little discriminant validity from a measure of “role-prescribed” customer service technical/task performance (rc = .). Several commonly used multi-item measures of externally-directed OCB also merely refer to “participating in organizational CSR programs,” rather than to specific behaviors or types of programs (e.g., Vlachos et al., ). Such content-free items are ambiguous and make it difficult for studies to inform theories of the determinants of OCB-X and for organizations to use measures to guide their CSR and HRM practice. Describing specific types of behaviors will permit more reliable and construct-valid measurement for research, as well as more actionable assessment for use in performance management, administrative decisions, program evaluation, and feedback applications. More robust measures of employee volunteering, employee charitable contributions, advocacy/lobbying, and outreach/education behaviors are needed.

Dispositional Antecedents of Externally-Directed Employee Citizenship Behaviors Given the relative nascence of the externally-directed OCB literature, few studies have examined their dispositional antecedents. Bettencourt et al. () found that clientdirected OCB are positively related to Agreeableness- and Openness-related traits in a sample of salespeople (r = .–.), although these correlations are likely quite inflated due to common-rater effects and scale content-overlap. Given the conceptual similarity of client-directed OCB to facets of internally-directed OCB (particularly the extraordinary effort facet of proactive OCB [OCB-P] and the helping facet of individuallydirected OCB [OCB-I]), we expect that future studies of client-directed OCB are likely

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  



to observe similar patterns of personality relations as these facets, with substantial validity for Agreeableness, Conscientiousness, and Extraversion (for meta-analyses of personality–OCB relations, see Borman et al., ; Chiaburu et al., ; Hurtz and Donovan, ; Ilies et al., ; LePine et al., ; Organ and Ryan, ). Somewhat more numerous studies have examined personality predictors of employee volunteering. Agreeableness (and related traits, such as empathy and prosocial personality; Penner et al., ) and Extraversion consistently emerge as the strongest traits differentiating employee volunteers from non-volunteers, although the same personality attributes appear to be less strongly related with volunteering intensity (e.g., number of hours volunteered; Rodell et al., ). This pattern of results is generally consistent with personality research on volunteering and charitable donations from non-work contexts. For example, using a nationally representative longitudinal sample from the United Kingdom (N = ,), Brown and Taylor () found that general life charitable donations were substantially positively related to Openness, Agreeableness, and Extraversion, and negatively related to Conscientiousness. Volunteering was positively related to Openness, Extraversion, and Emotional Stability. Given the divergent social roles and pressures across work and non-work contexts (Ones and Dilchert, a), we expect that some of these relations will differ for employee volunteering and charitable contributions in contexts where organizational support for volunteering and charitable giving programs is strong (e.g., while relations with Openness and Agreeableness may remain the same, Conscientiousness is likely to be positively associated with both behaviors in these organizations). Overall, much more research exploring the dispositional drivers of externally-directed OCB and using psychometrically-strong OCB-X scales is needed. As the preceding overview implies, externally-directed OCB constitute an important part of employee responsible behaviors in organizations and are essential for organizational success in modern economies. Research on OCB-X has been hampered by poor measurement and separation from the broader literature on individually-directed, organizationally-directed, and proactive OCB, with which OCB-X shares many conceptual and empirical similarities. Much research is still needed to develop construct valid measures of OCB-X facets and to assess the impact of individual differences traits in driving OCB-X performance.

E G B

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Defining Employee Green Behaviors Ones and Dilchert (a, ) defined employee green behaviors as “scalable actions and behaviors that employees engage in that are linked with and contribute to or detract from environmental sustainability.” Employee green behaviors encompass all of the actions that employees take that impact the environment, including both

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

. . , . . , . ,  . . 

positive green behaviors that benefit the environment (also referred to as employee pro-environmental behaviors) and negative ungreen behaviors that are harmful to the environment (also called “counterproductive sustainability behaviors [CSB]”; Dilchert ). Employees can both engage in (or refrain from) green behaviors (e.g., create sustainable products, recycle) and engage in (or refrain from) ungreen behaviors (e.g., pollute, end a green volunteering program). Refraining from positive environmental behaviors is not the same as actively harming the environment. Understanding both green and ungreen behaviors is critical for promoting and achieving environmental sustainability goals.

Models of Employee Green Behaviors Much of the research on green behaviors, as well as interventions targeted toward enhancing environmental performance, has treated each single environmental behavior as a unique criterion construct requiring separate investigation and intervention (Kaiser, ; cf. Bamberg and Möser, ). It was presumed that each specific proenvironmental behavior was driven by a unique configuration of attitudes, social norms, personality traits, and other factors that would not generalize to other behaviors, even if these behaviors were ostensibly very similar. Over time, researchers and practitioners discovered strong relations among pro-environmental behaviors, and posited that diverse green behaviors shared a common latent factor and could be predicted by the same personal and contextual factors (Kaiser et al., ). Some of the earliest models suggested that pro-environmental behaviors were unidimensional and driven primarily by environmental concern and other general pro-environmental attitudes (Dunlap and Van Liere, ; Hines et al., ; Kaiser, ). Soon, however, researchers recognized that such models were overly simplistic, and that distinct clusters of green behaviors existed that were predicted by different motives, traits, contextual cues, and other factors (Klein, ; Ones et al., ). Several taxonomies of pro-environmental behaviors have been proposed, both from general environmental psychology research, as well as research on workplace green behaviors specifically. Such taxonomies provide an organizing framework for green behavior research and interventions, helping to identify what behaviors are likely to respond to similar antecedents.

Resource-based models Many green behavior models group different pro-environmental actions based on the natural resources they impact (e.g., behaviors that impact water, energy, food, air quality, forests, biodiversity; see Gatersleben et al., ; Steg and Vlek, ; Stern, ; Whitmarsh and O’Neill, ). Such models can help organizations to identify a range of behaviors that contribute to a specific environmental goal, but they provide little insight into the factors that motivate specific behaviors or explain the unifying psychology behind each behavioral domain. Behaviors with similar consequences do

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not necessarily share similar antecedents or psychological underpinnings. For example, purchasing renewable energy may be more motivated by environmental concern, turning down the thermostat by frugality motives, and biking to work by health or pleasure motives, despite all of these behaviors impacting energy-related carbon output. Conversely, the same antecedents can drive behaviors with a wide array of environmental impacts. For example, frugality motives may lead a person to turn down their thermostat (impacting energy), purchase a low-flow faucet (impacting water), reuse supplies (impacting waste), and source materials locally (impacting carbon emissions from transport). Thus, considering environmental consequences is insufficient and ill-advised for developing a taxonomy of green behaviors (cf. the long recognition in I-O psychology and organizational research that job performance must be defined in terms of individual behaviors, not outcomes; Campbell, ; Viswesvaran and Ones, ).

Context-based models Other models group green behaviors based on the contexts in which they are performed. For example, Stern () proposed four categories of pro-environmental behavior: () environmental activism, () nonactivist behaviors in the public sphere, () private-sphere environmentalism, and () other environmentally significant behaviors. Stern would include all workplace employee green behaviors in his fourth category. Larson et al. (, ) proposed dimensions of “conservation lifestyle behaviors (e.g., household actions in the private sphere), social environmentalism (e.g., peer interactions and group membership), environmental citizenship (e.g., civic engagement in the policy arena), and land stewardship (e.g., support for wildlife and habitat conservation).” These models have emerged out of the social psychology tradition and reflect their disciplinary focus on situational antecedents of behavior. As a consequence, they ignore that, while situations may exert strong influences on behavior (Ones and Dilchert, a), within a particular context (e.g., work), individuals vary (i.e., individuals differ in the magnitude of their pro-environmental behaviors) and perform a wide array of environmentally relevant behaviors, each of which may be driven by different antecedents. They also ignore the substantial cross-situational consistency of many psychologically similar environmental behaviors (LévyLeboyer et al., ; Wiernik et al., ). Thus, situational context is also insufficient and ill-advised as an organizing framework for green behaviors.

OCB-based models of green behavior Several organizational researchers have proposed more psychologically informed green behavior models that group behaviors based on their psychological similarity and purported common antecedents. One widely held perspective conceptualizes employee green behaviors as a particular form of organizational citizenship behavior, with “environmentally-directed organizational citizenship behaviors [OCB-E]” being analogous to individually-directed, organizationally-directed, and task-directed/proactive OCB (Boiral and Paillé, ; Lamm et al., ; Robertson and Barling, ; Temminck

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

. . , . . , . ,  . . 

et al., ). This conceptualization is similar to OCB-X, but specifies the environment as the target of the externally-directed citizenship behaviors. The most popular model from this perspective is Boiral and Paillé’s () three-factor OCB-E model of employee green behaviors. Their model is designed to closely parallel the lowerorder factors of general OCB (Borman and Motowidlo, ; Podsakoff et al., ) and includes factors called “eco-helping” (supporting coworkers in performing sustainable behaviors), “eco-civic engagement” (participating in organizational proenvironmental events, keeping apprised of organizational pro-environmental initiatives), and “eco-initiatives” (proposing new sustainable ideas, volunteering to carry out green tasks). Most other models in this tradition focus on similar behaviors, though some researchers use the same OCB-E label to refer to actions more traditionally considered to be green behaviors, such as recycling or resource conservation (cf. Lamm et al., ; Robertson and Barling, ). These “OCB-E” models are not without problems either. There is no reason to expect that employee green behaviors and OCB have the same structure. Green behaviors can be a part of all job performance dimensions, not only OCB (Ones et al., a, b). For example, a technician installing a solar panel performs green behavior as part of their core technical/task performance, an employee proposing a new green program displays green proactive/effort/initiative performance, an employee disregarding waste disposal protocols demonstrates green counterproductive work behaviors, and supervisors and team members can perform a variety of green leadership and management behaviors to coordinate and support others’ green actions. Ones and colleagues’ (Ones and Dilchert, , a; Ones et al., b) Green Five taxonomy (see below for a full explication) explicitly recognizes and models how green behaviors connect with each dimension of general job performance. Employee green behaviors are best conceptualized as a compound performance domain spanning all basic job performance dimensions and encompassing all job performance behaviors that impact the natural environment (Campbell and Wiernik, ). Models that impose the OCB structure onto employee green behaviors narrow the green behavior domain to interpersonal and initiative-related behaviors, excluding more technical green behaviors that are most often performed in most organizations (Ones and Dilchert, a). Norton et al. () proposed a similar division of EGB into voluntary versus required green behaviors. They describe required (termed “task-related”) EGB as green behaviors performed as part of a job’s core technical job duties; they include following environmental policies, responsible product choices, changing work procedures, and eco-innovation in this category. They describe voluntary (termed “proactive”) EGB as green behaviors that exceed organizational expectations. They include initiating environmental policies, lobbying and activism, green interpersonal behaviors, and prioritizing environmental interests in this category. The distinction between “required” and “voluntary” EGB mirrors early definitions of organizational citizenship behavior as employee actions that are extra-role and unrewarded (Organ, ). OCB researchers eventually recognized that OCB may or may not be required and rewarded,

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and that a focus on the actual behaviors of interest (helping, persistence, etc.) is more fruitful (Organ, ; Rotundo and Sackett, ). Required versus voluntary is similarly unhelpful for categorizing green behaviors. The Norton et al. taxonomy conflates motive (requirement versus other motives) with behavioral content. All manner of employee green (and ungreen) behaviors may be required or not by organizations or job roles. Emphasis on whether a green behavior is required distracts from its behavioral content and the diversity of motives and other antecedents that may impel it.

The Green Five taxonomy One comprehensive model of employee green behaviors is the Green Five taxonomy developed by Ones and colleagues (Ones and Dilchert, , a; Ones et al., b). Ones and colleagues developed this through an extensive series of international critical incidents studies, examining more than , descriptions of employee green behaviors reported from over fifteen countries (see Ones and Dilchert, a; Ones et al., b, for details). The aim of these studies was to thoroughly describe the diversity of environmentally relevant behaviors employees perform at work, including behaviors with both positive and negative environmental impacts. The Green Five taxonomy is a content-based taxonomy that groups environmental behaviors according to similarity of the behaviors being performed, their common functional goals, and shared purported psychological underpinnings. It includes seventeen functionally distinguishable behavioral categories with relatively homogeneous content, organized under five broad meta-categories (the Green Five). Category descriptions and behavioral examples are shown in Table .. Below, we briefly describe each meta-category. The Transforming meta-category includes behaviors that are aimed at adapting and changing to make work products and processes more sustainable. Job-specific example behaviors in this meta-category include many forms of green technical/task performance, such as a researcher investigating new agricultural plants that require fewer pesticides, an architect designing a low impact building, a store owner moving refrigerated items closer together to reduce cooling needs, and a procurement agent choosing sources based on their sustainability records. The psychological core of Transforming behaviors is adaptability and openness to change. Transforming subcategories vary in the degree to which they require creative and innovative effort and ability from employees (e.g., eco-innovation) versus merely adopting existing sustainable solutions (e.g., choosing responsible alternatives). Transforming behaviors are the foundation of employee green behaviors. To some degree, all green behaviors require changing one’s behavior and adapting to new ways of doing things (Maloney and Ward, ). Factor analytically, Transforming behaviors tend to be the best indicators of the general factor of employee green behaviors (Wiernik et al., b). The Conserving meta-category includes behaviors aimed at avoiding wastefulness, and thus preserving resources. It encompasses behaviors traditionally described as the “Rs” (reduce, reuse, recycle), as well as repurposing. In terms of job performance dimensions, Conserving behaviors typically reflect green technical/task performance and avoiding green CWB. Conserving behaviors target diverse resources—water,

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. . , . . , . ,  . . 

Table 6.2 Description and Example Behaviors for Each Green Five Content Category Employee green behavior category

Description

Example positive behavior

Example negative behavior

Transforming

Behaviors aimed at adapting and changing to make work products and processes more sustainable

Creating sustainable products and processes (Ecoinnovation)

Generating novel ideas and new, innovative solutions that are more sustainable

Removing toxic chemicals from a manufacturing process; creating a mutual fund investing in environmentally responsible companies

Ignoring environmental considerations when designing new products

Embracing sustainable innovations

Implementing emerging innovative ideas and applying them to one’s specific situation

Installing a green roof to reduce cooling needs; using virtual rather than in-person meetings

Insisting on computer printouts when paperless options are available

Choosing responsible alternatives

Choosing the most sustainable option out of available alternatives

Purchasing eco-friendly cleaning chemicals; purchasing energyefficient equipment

Using raw materials from unsustainable sources

Changing how work is done

Optimizing existing processes to improve their environmental impact

Changing shipping routes Changing to a less to be more efficient; using sustainable work public transit to commute procedure; implementing a procedure with greater environmental costs than alternatives

Conserving

Behaviors aimed at avoiding wastefulness and thus preserving resources

Reducing use

Avoiding initial use of resources or materials

Reusing

Using the same resources or Washing plastic lab materials multiple times equipment rather than discarding; using durable, rather than disposable products or equipment

Using single-use products when durable alternatives are available

Repurposing

Avoiding discarding used resources or materials by putting them to alternative uses

Diverting cooking oil to make biodiesel; collecting rainwater for industrial use

Sending expiring food to a landfill rather than giving to local farmers for animal feed

Recycling and composting

Recovering some usable materials from spent products versus sending to landfill

Recycling cans, bottles, paper; composting food waste

Throwing away carpet scraps rather than using available recycling process

Printing double-sided; turning off lights when unneeded

Leaving a machine running when not in use; using resources wastefully

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

Avoiding Harm

Behaviors aimed at avoiding/inhibiting negative environmental behavior, reducing impact, and mitigating/restoring environmental damage

Preventing pollution

Disposing of or releasing materials into the environment in a way that prevents (versus causes) harm to ecosystems

Installing a collection system to prevent water contamination; scrubbing emissions before release

Contaminating soil by dumping harmful chemicals; improperly disposing of paint, oil, or other hazardous substances

Strengthening ecosystems

Actions aimed at repairing/ recovering from existing environmental damages

Maintaining wildlife areas around work facilities; cleaning up litter around local area

Clear cutting trees unnecessarily; growing pesticide-dependent crops

Monitoring environmental impact

Assessing behaviors, processes, and outcomes to anticipate the potential for long-term harm

Preparing a company emissions and resource use report; calculating the lifecycle carbon cost of a product

Failing to follow up on clean-up effort after a negative environmental event

Influencing Others

Behaviors aimed at spreading sustainability behaviors to other individuals

Leading, encouraging, and supporting (Green leadership)

Interpersonal influence behaviors that encourage, support, incentivize, guide, empower, and motivate others to act environmentally responsibly, or model effective green performance

Providing incentives for biking or using public transit commute; modeling effective green behaviors

Mocking a co-worker who takes food waste home to compost

Managing, organizing, and coordinating (Green management)

Behaviors that make others’ green behaviors easier or more effective (e.g., by providing opportunities, resources, coordination, plans, or procedures)

Creating unnecessary Making recycling bins bureaucratic obstacles accessible to all for green behaviors employees; arranging an employee carpool network

Enhancing others’ Educating and training (Green environmentally-relevant communication) declarative and procedural knowledge

Instructing employees to Training employees in proper chemical handling; discard unused materials providing feedback on green performance; running a community green behavior outreach program (continued )

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

. . , . . , . ,  . . 

Table 6.2 Continued Employee green behavior category

Description

Example positive behavior

Example negative behavior

Taking Initiative Green behaviors that are proactive, entrepreneurial, and involve a certain level of personal risk or sacrifice Initiating programs and policies

Proactively starting a new environmental program/ policy; involves risk, effort to change the status quo

Stopping a successful Creating a new environmental program sustainable purchasing policy; forming a Green Team to plan sustainability programs

Lobbying and activism (Green voice behavior)

Advocating for environmental causes to supervisors, organizational decision-makers, governments, or other power-holding individuals and institutions

Pushing organization to disclose environmental record; advocating for environmental issues to supervisor

Putting environmental interests first

Sacrificing one’s own Turning down an interests in the name of environmentally harmful environmental sustainability project; not using air conditioning on hot days

Advocating for programs or policies that are environmentally harmful

Prioritizing one’s comfort or convenience over environmental concerns

Source: Adapted from Ones et al. (2018b).

energy, raw materials, supplies, etc.—but they are united in their common functional goal for avoiding wastefulness and their psychological underpinnings of frugality, thrift, and responsibility. Conserving behaviors range in effectiveness from reducing use (largest positive impact on the environment) to recycling and composting (smallest positive impact on the environment, with additional resources needed for processing). The Avoiding Harm meta-category includes behaviors aimed at avoiding or inhibiting negative environmental behavior, reducing impact, and mitigating or restoring environmental damage. The negative pole of this meta-category includes behaviors that harm the environment by diminishing the health of the Earth’s ecosystems and disrupting natural biological, chemical, and physical processes that help the planet recover from distress. In terms of job performance dimensions, Avoiding Harm behaviors can be conceptualized as avoiding green CWB. The psychological core of most Avoiding Harm behaviors at the positive pole is cautiousness, self-control, and responsibility (versus carelessness and irresponsibility at the negative pole). Behaviors associated with proactively avoiding harm or repairing existing environmental damage may be underpinned by altruism, particularly if they involve repairing harm that is

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caused by others or are motivated out of concern for the welfare of future generations. Avoiding Harm is especially relevant for responsible leadership (Stahl and Sully de Luque, ). The Influencing Others meta-category includes behaviors that spread sustainability behaviors to other individuals. Its psychological underpinnings are Extraversion, Agreeableness, and interpersonal skill. Behaviors in this meta-category correspond to Campbell’s () leadership, management, and communication job performance factors. All these behaviors can be directed toward subordinates, coworkers, and superiors, as well as individuals outside of the organization, such as clients, industry and strategic partners, suppliers, community members, and other stakeholders. The Taking Initiative meta-category includes behaviors that are proactive and involve a degree of personal risk or sacrifice. It is analogous to the initiative, persistence, and effort factor of job performance (Campbell and Wiernik, ), as well as proactive performance constructs (e.g., personal initiative, voice, taking charge; Thomas et al., ). Taking Initiative behaviors serve the function of rejecting the (unsustainable) status quo and proactively changing the context for a more sustainable future. They involve accepting potential negative consequences (e.g., financial loss, discomfort, social consequences) and going against societal expectations. The psychological core of Taking Initiative is proactivity (Fuller and Marler, ; Thomas et al., ). Taking Initiative can be directed at any of the other green behavior meta-categories (Avoiding Harm, Transforming, Conserving, Influencing Others); the distinguishing feature of this meta-category is the required degree of effort, initiative, and sacrifice.

Measuring Employee Green Behaviors Employee green behaviors have often been assessed using single-behavior measures, such as turning off lights and electronics, purchasing eco-friendly products, or participating in environmental volunteering projects (e.g., Goldstein et al., ; McDonald, ; Vyvyan et al., ). Such measures suffer from low reliability, and their limited construct bandwidth limits the ability of any variable to be a strong predictor. Moreover, a myopic focus on single behaviors hampers progress toward measuring individual contributions to organizational sustainability well, as any single behavior can have only limited beneficial impact (Kaiser et al., ). Construct valid, reliable, and practically useful employee green behavior measures must include multiple items tapping a diverse range of behaviors. Employee green behavior measures may either be designed to assess the domain broadly, in which they should include item content from each of the Green Five behavioral categories, or to assess a specific employee green behavior category with high fidelity (e.g., Conserving, eco-innovation). Developers of the latter type of EGB measure must ensure the items still reflect a diversity of behaviors. Multi-item scales that measure a single behavior (or small set of behaviors) targeted toward different

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. . , . . , . ,  . . 

resources (e.g., a scale assessing reducing use of water, energy, gas, and supplies; a scale assessing recycling of glass, paper, metal, and oil; cf. Carrico and Riemer, ) suffer from the same limited construct breadth as single-item measures, limiting their predictability and utility for feedback or other applications. Developers and users of narrow EGB measures must also ensure that the conclusions that they draw are limited to the EGB category assessed, rather than inappropriately generalizing to the entire EGB construct domain. Ones et al. (b) systematically reviewed multi-item measures of employee green behaviors and identified twenty-five relevant scales. Of these measures, nineteen were intended to broadly tap the employee green behavior domain, while six were focused on assessing specific dimensions of employee green behaviors (e.g., green leadership; Robertson and Barling, ). Many measures included a very narrow range of green behaviors, despite their authors intending to capture the green behavior domain broadly. For example, many scales included only items assessing recycling/reducing use (Conserving) and sustainable product choices (Transforming) behaviors. Avoiding Harm behaviors were particularly poorly represented among available EGB scales, as were negative (environmentally harmful) behaviors. Many EGB scales include vague general EGB items without specific behavioral content (e.g., “I adequately completed assigned duties in environmentally-friendly ways”; Bissing-Olson et al., ; “I undertake environmental actions that contribute positively to the image of my organization”; Boiral and Paillé, ; “Perform environmental tasks that are not required by my company”; Graves et al., ). These types of items are likely to suffer from substantial rater-specific error, inconsistent use of rating scales, and idiosyncratic rater definitions of ‘environmentally friendly’ and implicit theories of green behavior. These factors will lead to poor interrater reliability and interpretability (Campbell and Wiernik, ; Hoffman et al., ). The most popular EGB scales are those that conceptualize employee green behavior as “organizational citizenship behavior for the environment (OCB-E)” (Boiral and Paillé, ; Robertson and Barling, ; Temminck et al., ). As discussed above, these measures inappropriately equate green behaviors with OCB and often force green behaviors to have the same factor structure as general OCB, which focuses on interpersonal support and personal initiative behaviors. As a consequence, the measures focus almost exclusively on Influencing Others and Taking Initiative behaviors, ignoring the more technical dimensions of EGB (Conserving, Avoiding Harm) that make up the majority of behaviors (Ones and Dilchert, a) with the greatest impact (Stern, ) in this domain. By contrast, the scale by Lamm et al., , also called “Organizational Citizenship Behavior toward the Environment,” contains only Conserving items. This inconsistent content across “OCB-E” measures underscores the incoherence of using OCB as an organizing framework for EGB. Comprehensive measures of EGB have been designed using the Green Five taxonomy. By having a content-valid, empirically developed taxonomy of green behaviors to select their items, the developers of these scales are able to ensure that they cover the full range of the employee green behavior construct space. There are currently four

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available Green Five-based EGB measures. Ones and Dilchert () presented a brief fifteen-item measure intended to assess overall EGB performance. McConnaughy’s () twenty-seven-item measure and Wiernik et al.’s (a) twenty-five-item measure report scores for both overall EGB and Green Five meta-category subscales. Finally, Wiernik et al. (b) present a comprehensive eighty-five-item inventory¹ that reports scores for overall EGB, Green Five meta-category subscales, and seventeen green behavior homogeneous item clusters. A sufficient number of items are included in the Green Five subscales to permit reliable assessment of respondents’ relative strengths and weaknesses across green behavior categories, independent of their overall environmental performance (cf. Gignac and Watkins, ). Short forms of the Wiernik et al. (b) scale with – items are also available for applications where detailed subscale scores are not needed. Additional EGB measures in the literature include the scale by Graves et al. (; though this scale had weak coverage of Avoiding Harm) and the scales by Norton (, appendix A).

Dispositional Antecedents of Employee Green Behaviors Relatively little research has yet examined individual differences antecedents of green behaviors at work; much more research has been conducted on pro-environmental behaviors performed in non-work contexts (Dilchert and Ones, b; Wiernik et al., c). Most research on antecedents of non-work pro-environmental behavior has focused on environmental knowledge/awareness and environment-focused psychosocial constructs, such as environmental concern, environmental values, attitudes toward specific environmental behaviors, perceived environmental norms, and perceived control over environmental outcomes (Ones and Dilchert, b; Ones et al., a; Wiernik et al., c). Several meta-analyses have demonstrated that these constructs have moderate to strong relations with pro-environmental behavior (e.g., Bamberg and Möser, ; Klöckner, ; Schwenk and Möser, ). Much research has also examined demographic differences in pro-environmental behaviors (Hines et al., ; Klein et al., ; Wiernik et al., ). Research on employee green behaviors in work settings has adopted a similar approach by examining constructs such as environmental commitment, environmental values, and perceived organizational environmental norms, polices, climate, and support (e.g., Norton et al., ; Paillé and Boiral, ; Paillé et al., ; Paillé and Mejía-Morelos, ; for a review, see Norton et al., ). Little research has examined the influence of stable psychological individual differences, such as cognitive abilities, personality traits, and interests, on green behaviors, ¹ While an -item measure may be impractical for many purposes, the intent is to provide reliable and valid subscales for each of the Green Five meta-categories and sub-categories. For example, a researcher wishing to measure Transforming can use the only the sub-scale relating to that construct. In this way, the complete long-form Wiernik et al. (b) inventory is akin to a Big Five personality inventory.

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

. . , . . , . ,  . . 

both inside and outside the workplace (Norton et al., ; Ones and Dilchert, b). A focus on environment-specific characteristics limits researchers’ and practitioners’ ability to integrate employee green behaviors into the broader nomological network of individual-level work behaviors and attitudes. This separation particularly hampers practitioners’ ability to determine what positive or negative impacts HRM practices that are designed to enhance green behaviors may have on other job performance domains (Dilchert and Ones, ). Researchers have recently begun to examine the Big Five personality traits as predictors of employee green behaviors and non-work pro-environmental behavior. Conscientiousness, Openness, and Agreeableness have consistently emerged as the strongest predictors of green behavior, including both general green behavior (Brick and Lewis, ; Hilbig et al., ; Kvasova, ; Markowitz et al., ), and specific pro-environmental actions, such as recycling and responsible waste management (Swami et al., ), green purchasing (Fraj and Martinez, ; Luchs and Mooradian, ), and reducing resource consumption (Milfont and Sibley, ; Wiseman and Bogner, ). Extraversion and Emotional Stability are inconsistently related to green behaviors. Initial results in workplace settings have come to similar conclusions. Employee green behaviors are moderately positively related to Openness, Agreeableness, and Conscientiousness (Dilchert and Ones, ; Kim et al., ). Individuals who are responsible, empathetic, and who place value in beauty and novel experiences tend to be more environmentally responsible at work. The relative validity of each trait varies across green behaviors. For example, Conscientiousness is most related to Avoiding Harm and Conserving green behaviors (cf. Conscientiousness’ stronger relations with organizationally- and task-directed dimensions of OCB and counterproductive work behaviors [CWB]; Berry et al., ; Chiaburu et al., ). Beyond the Big Five, meta-analyses also show moderately strong relations of pro-environmental behaviors with general self-efficacy (Hines et al., ) and future time perspective (a Conscientiousness-related trait concerned with planning for and achievement of long-term goals; Milfont et al., ). Emerging research shows that personality traits are important for understanding employee green behavior and that the same traits that contribute to environmental performance can also predict other job performance dimensions. However, research in this area is nascent. Many more studies of personality trait relations with employee green behaviors are needed. Research is similarly needed on how green behavior relates to other individual differences traits, such as cognitive abilities (Ones et al., ) and work interests and values (Hansen and Wiernik, ). In sum, employee green behaviors constitute an important, emerging domain of employee responsibility in contemporary organizations. In the past decade, our field has directed enormous attention to defining, conceptualizing, identifying, and measuring employee green behaviors and has linked them to existing models of general job performance. Clearly, there are individual differences in both overall individuallevel environmental performance, as well as in sub-categories of employee green behaviors. Suitable measures are available for both. Thus, research can now proceed

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  



to examine individual differences determinants of the full array of employee green behaviors.

C

.................................................................................................................................. In this chapter, we have reviewed research on two critical domains of individual-level employee responsible behaviors that form the foundation of organization-level corporate social responsibility—externally-directed employee citizenship behaviors and employee green behaviors. These behavioral domains are the foundation through which organizations realize their CSR goals. We reviewed conceptualizations, models, and measurement for each responsible behavior domain, as well as available research on each domain’s dispositional antecedents. We highlighted how citizenship, green, and ethical behaviors are distinct behavioral domains that are each part of employees’ overall job performance. As we conclude this chapter, we wish to highlight five major limitations that pervade each literature and hinder progress on understanding these individual-level (micro) foundations of CSR. First, each of these literatures suffers from rampant conceptual ambiguity and inadequate measurement. Researchers often fail to clearly specify what specific behaviors they are intending to study, or they use definitions that are too broad to circumscribe a meaningful behavior category (e.g., simply referring to “participating in CSR programs”). To adequately study and manage OCB-X and green behaviors, we must carefully state what common features unite behaviors within a domain and what specific behaviors and behavioral categories are included and excluded. Scale items must refer to specific behaviors that employees perform, not vague statements about behavioral outcomes (e.g., “do things that are good for the environment”). Ambiguous definitions and measures produce results that are uninterpretable and hamper cumulative research progress. Second, researchers in each domain frequently assess only a limited range of the behaviors belonging to that domain, but then draw conclusions as though they had assessed the construct broadly. For example, popular employee green behavior measures include items from only the Conserving (Lamm et al., ) or Influencing Others and Taking Initiative (Boiral and Paillé, ) categories. Research on all forms of employee responsible behavior is also balkanized and fragmented. For example, the literature on externally-directed employee citizenship behaviors has developed in isolation from broader OCB research. Both of these problems stem from a failure to consider the construct validity of one’s measures and how the constructs being assessed fit into the broader nomological network of employee work behavior. Researchers must endeavor to assess employee OCB-X and green behavior comprehensively and to ensure that the conclusions they draw align with the conceptual breadth of their measures. Drawing general conclusions about a construct domain from measures with narrow construct breadth contributes to inconsistent findings and confusion

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

. . , . . , . ,  . . 

amongst researchers and practitioners. Failing to consider the connections between specific aspects of a behavioral domain leads to redundancy in research efforts and inability of ideas from different disciplines to inform and enhance each other. Third, research on employee OCB-X and green behavior is largely disconnected from the broader job performance literature. Responsible behavior researchers rarely carefully consider how their constructs intersect with existing performance dimensions or else draw conceptually inappropriate parallels with existing constructs (e.g., treating green behavior exclusively as a form of OCB). Insufficient connection of employee responsible behaviors with job performance defined more broadly prevents responsible behavior research from benefitting from relevant knowledge in other literatures. Future research on employee responsible behaviors must conceptualize these behaviors as part of employees’ overall job performance and consider how the constructs of interest connect with existing performance constructs. More research is also needed to empirically assess the correlations of specific dimensions of OCB-X and green behaviors with general job performance factors (e.g., facets of technical/task performance, OCB, CWB, peer/hierarchical leadership and management, communication, and effort/initiative), as well as the potential to simultaneously benefit both responsible behaviors and other performance factors through the same HRM interventions. Fourth, many areas of employee responsible behavior research have focused almost entirely on contextual or domain-specific individual antecedents, failing to investigate relations with core dispositional characteristics, such as personality traits, especially the Big Five and compound personality variables, cognitive abilities, knowledge, and skills, and work interests and values. Personality antecedents of OCB-X and green behaviors are not well-understood. These literatures need basic research establishing fundamental relationships of employee responsible behaviors with the traits that form the core of applied psychology’s knowledge on the determinants of employee job performance and success. Organizational prosocial and environmental performance depend on individual employees acting in ways that support organizational social responsibility. Understanding what characteristics drive these behaviors is vital for organizational human resources management practices to hire and support responsible employees into organizations and to manage and mitigate employee tendencies toward less responsible actions. Finally, we reiterate that employee citizenship, ethical, and green behaviors are three loosely related domains with divergent nomological networks. Measuring one of these behavioral domains does not necessarily permit generalizations to all three domains. If organizations seek to advance their social, ethical, and environmental goals, it is vital that they treat employee citizenship, ethical, and green behaviors as distinct and co-equal performance domains. Interventions that target ethical behavior will not necessarily also impact green behavior or citizenship behavior (and vice versa). By specifically designing strategies for each employee responsible behavior domain (including specific performance facets within each domain), organizations can better realize their CSR goals, promoting ethical growth, social equity, and the long-term sustainability of the planet on which they operate.

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  



A The first two authors named contributed equally to this chapter. This work was supported by the Belgian American Educational Foundation through a fellowship to B. M. Wiernik.

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. . , . . , . ,  . . 

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Wiernik, B. M., Dilchert, S., and Ones, D. S. a. Age and employee green behaviors: A meta-analysis. Frontiers in Psychology, , . . Wiernik, B. M., Dilchert, S., Ones, D. S., and Klein, R. M. b. Item factor analysis of employee green behaviors. Poster presented at the Society for Industrial and Organizational Psychology conference, Anaheim, CA, Apr. Wiernik, B. M., Ones, D. S., and Borman, W. C. a. Integrating Proactive, Interpersonal, Organizational, and Prosocial Behaviors: A Consensus Taxonomy of Organizational Citizenship Behaviors. Working paper. University of South Florida. Wiernik, B. M., Ones, D. S., and Dilchert, S. b. Schematic Depiction of Conceptual Relationships Among Domains of Job Performance and Employee Responsible Behaviors.

Wiernik, B. M., Ones, D. S., Dilchert, S., and Klein, R. M. c. Individual antecedents of proenvironmental behaviours: Implications for employee green behaviour. In V. Wells, D. Gregory-Smith, and D. Manika (eds), Research Handbook on Employee Pro-Environmental Behaviour, –. Cheltenham: Edward Elgar. Williams, L. J., and Anderson, S. E. . Job satisfaction and organizational commitment as predictors of organizational citizenship and in-role behaviors. Journal of Management, (), –. Wiseman, M., and Bogner, F. X. . A higher-order model of ecological values and its relationship to personality. Personality and Individual Differences, (), –. Young, W., and Tilley, F. . Can businesses move beyond efficiency? The shift toward effectiveness and equity in the corporate sustainability debate. Business Strategy and the Environment, (), –.

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  Who Really Wins? ......................................................................................................................

 

E of business leaders and employees volunteering their time to support their communities goes back to the eighteenth and nineteenth centuries (Hall, ), but the provision of formal corporate volunteering (CV) programs is a relatively new phenomenon which has grown significantly over the past thirty to forty years. CV is now an integral part of many companies’ corporate responsibility (CR) or Corporate Community Involvement activities and viewed as an important talent management and brand enhancement tool, yielding functional benefits to all stakeholders involved. In addition, alongside growing practitioner interest in the field, there has been a steady stream of multidisciplinary academic research investigating antecedents, outcomes, and a range of intervening variables involved in CV, both at the individual (or “micro”) level and from an organizational perspective. It could be argued that CV is all the rage; even governments have demonstrated an interest in how they might support and promote it (CIPD, ; MacPhail and Bowles, ). However, alongside corporate investment in CV comes a demand for impact, along with an evidence base that demonstrates sufficient returns on financial and time investment (Milbourne and Cushman, ). This focus on CV’s performative benefits for business has strongly influenced both practitioner and academic perspectives, with a strong emphasis placed on measuring and demonstrating the benefits for both businesses and individual volunteers. As a result, it will be argued that this predominantly functionalist approach has somewhat biased our understanding of CV’s role in society, which is promoted in terms of its benefits for volunteers and companies, rather than its impact on beneficiary organizations, about which little is known. More critical arguments that are rarely encountered in the practitioner and academic literature suggest that CV could be viewed as a useful means of yielding significant benefits to corporations at little cost, whilst the returns for third sector recipients are of little

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interest to academic or corporate stakeholders. In addition, the framing of CV as a tool to enhance corporate performance leaves it vulnerable to economic downturns and changing corporate sentiment. CV can also be seen as a mechanism that governments encourage in order to disguise the impact of reductions in the funding of skilled, secure jobs in the public and third sectors. Finally, it could be argued that since relatively little research has been conducted on the effects of CV on the third sector recipient organizations, the perspectives of the least powerful stakeholders in CV programs have been marginalized. This chapter will investigate these arguments more fully in an attempt to come to a clearer and more balanced understanding of both the benefits and limitations of CV, along with possible directions for future research. First, some background will be provided by outlining definitional issues, statistics in relation to the growing influence of CV, and the nature and evolution of current CV offerings. CV’s historical association with broader, societal critiques of the role of business in society and the consequent need to establish a licence to operate will also be discussed. Next, the academic and practitioner research in the field will be reviewed, revealing in the process the strong influence of the business case discourse over the nature and direction of research focus and effort. The predominant focus on the benefits of volunteering, for both corporates and employees, has led to the normative assumption, rarely questioned, that CV is overwhelmingly “good” and should be promoted more widely. This has led to CV being uncritically depicted as a powerful community engagement tool that helps to bolster corporate legitimacy, engage employees, and achieve multiple organizational benefits. Thirdly, the literature will be critiqued in relation to questions that are not researched, voices that are not heard, and the social and political agendas that are not discussed. The chapter concludes by suggesting avenues for future research that will address these corporate and academic lacunae.

B T C V

.................................................................................................................................. Considerable confusion has arisen from a lack of academic or practitioner consensus around what term to apply to the phenomenon of employees volunteering their time for the benefit of a charitable organization or social initiative. Terms include employee volunteering, corporate volunteering, employer supported volunteering, employeesupported volunteering, skills-based employee engagement, corporate community investment, and volunteerism. Some authors differentiate between “employee volunteering” which can take place with or with or without corporate support and “corporate volunteering.” For example, Rodell and her colleagues define employee volunteering (EV) as “employed individuals giving time during a planned activity for an external nonprofit or charitable group or organization” (Rodell et al., , ). EV is then subdivided into “personal volunteering” used to describe volunteering conducted

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within the employee’s own time and “corporate volunteering” as any volunteering that is “conducted through a company initiative” (Rodell et al., , ). Other authors do not differentiate between employees volunteering on their own time or not, as long as the company offers “support” in some way. Adding to the confusion, Pajo and Lee () conflate employee volunteering, corporate volunteering, and employer-supported volunteering, and for some reason, restrict volunteering to the local community (Pajo and Lee, , ). This chapter defines corporate volunteering as employees volunteering for a charitable organization, nonprofit group, or social purpose, who are supported by policies, programs, or initiatives provided by their employer. Any volunteering that takes place outside of a company initiative or without corporate support is not considered to be corporate volunteering. There is also some confusion over the beneficiaries of CV support and the kinds of recipient organizations toward which the volunteering is aimed at (Brockner et al., ; do Paco and Nave, ). Most often, the beneficiaries are identified as not-forprofit organizations (NFPs) or charities. These designations are somewhat problematic as some charities run “for-profit” operations in order to subsidize their charitable purposes (e.g. running retail outlets). Another term that is sometimes used for NFPs is the “third sector”, which differentiates charitable organizations from the private/ commercial and government sectors. Hudson (, ) defines the “third sector” as organizations that: Exist primarily for a social purpose rather than having a profit-making objective; Are independent of the state because they are governed by an independent group of people and are not part of a government department or a local or health authority; Reinvest their financial surpluses in the services they offer or the organisation itself.

To add further confusion, many CV programs focus on supporting small businesses, co-operatives, or entrepreneurs in order to help strengthen local economies and provide employment for local people (Cycyota et al., ). Clearly these are not NFP organizations within the third sector. In this chapter, the term NFP will be used to refer to charitable organizations that are run for a social purpose (regardless of whether they run a commercial arm). In addition, the term “beneficiary organizations” will be used to designate all organizations that benefit from volunteers provided via CV initiatives, including SMEs and forprofit organizations, as well as NFPs.

History of CV The origins of CV are difficult to determine. It could be argued, depending on the definition adopted, that the roots go back to early forms of corporate philanthropy in

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the nineteenth century, where trades people and business leaders would volunteer their professional and managerial skills by helping to establish and/or run charitable organizations and social initiatives (Hall, ; Hatfield Edwards, ).¹ At the beginning of the twentieth century, there was a need to establish the moral and social legitimacy of business in the face of perennial doubts concerning the social economic and political role played by increasingly powerful corporations. This need helped to foster a close relationship between public relations, internal corporate welfare programs, and widely publicized philanthropic and community engagement agendas, which would include EV (Galia, ). It was also around this time that businesses in the United States established membership organizations, such as the Rotary and the Lion’s Clubs, specifically to foster amongst businesses a spirit of service to the community, which would partly manifest in the form of EV activities. One of the earliest schemes to promote CV reveals its complex associations with the social critique of business, a need to establish corporate legitimacy, subsequent public relations challenges, and early efforts at corporate responsibility (CR). In , riots took place in Los Angeles that resulted in thirty-four deaths and $m of property damage. The Watts riots followed allegations of police brutality during the arrest of a black citizen for a drunk driving offence. The subsequent investigation identified a variety of social ills that helped foment the riots including lack of employment opportunities for African Americans, leading directly to calls for businesses to be more “socially responsible” (Boyd, ). This crisis of legitimacy focused corporate attention on the need to demonstrate more broadly their socially responsible credentials, and it led to the establishment in  of the Involvement Corps supported by around twenty businesses with the prime purpose of coordinating employee volunteering. According to Boyd, who was involved in leading the Involvement Corps, “[o]ne fact that makes the Involvement Corps stand out amongst business-based community action programs is that it centers around the commitment of one of industry’s most important—and in this area, usually untapped—resources, employees” (Boyd, , ). Shortly after the Watts riots, in , President Nixon spearheaded the establishment of the National Center for Voluntary Action to “encourage and assist effective voluntary action throughout the private sector” (quoted in Allen, , ).

The Growth of CV From these early beginnings in the United States, CV has become an increasingly important element of businesses’ CR and community involvement strategies, growing in scope, importance, and geographic spread, experiencing particularly strong expansion, especially outside the US, since the s (Allen, ). Robust academic research ¹ E.g. a history of the “ragged” schools in Britain during the nineteenth century shows evidence of commercial benefactors volunteering their time to run and fund the schools, whilst many ordinary working people volunteered to teach in the schools (Ragged University, ; Smith, ).

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concerning precise statistics around CV is lacking. According to Brudney and Gazley, the little research into employee volunteering trends that existed in  was not methodologically robust enough to make its way into academic journals (Brudney and Gazley, ). Over ten years later, little has changed, with most research into CV statistics and trends coming from Western, not-for-profit (NFP), lobbying, and membership organizations with vested interests in the area, and where methodology is either unreported or lacking in academic rigor. According to the  CECP report, in the US, up to  percent of companies (in a sample of ) ran at least one formal CV program (CECP, ). The academic literature seems to support this high percentage, but samples tend to focus mostly on the larger Fortune  companies (Rodell et al., ). However, the Deloitte  Impact study surveyed , respondents within a much broader range of organizations (Deloitte Development, ). This study showed that  percent of respondents worked for companies that did not offer a volunteer program. A Demos study in  indicated that only  percent of medium-sized businesses in the UK offered volunteering to their employees (BITC, ), a figure supported by Brooks and SchlenkhoffHus (, ). Research in this field does suggest that CV is more likely to be offered within larger multinational corporations, as compared to smaller companies or the public sector (Basil et al., ), with figures ranging from  to  percent regarding the extent to which CV is offered within the SME context. Similar limitations affect research conducted concerning the global picture. A recent report by CECP () reported that, in Africa,  percent of companies offered time off to volunteer,  percent in Asia,  percent in Europe, and  percent in Latin America. However, these figures were based on extremely small samples (N =  for the whole survey;  from Europe,  from Asia,  from Africa, and  from Latin America). A survey undertaken in , covering the top  Australian businesses, indicated that  percent had CV programs (Zappala and McLaren, ). A study covering  Chinese companies revealed that just over  percent provided the opportunity for their employees to participate in a CV program (Hu et al., ). According to Pajo and Lee (), the increasing popularity of CV in North America, the UK, and Western Europe makes it one of the fastest growing offerings in the CR toolbox, with one report suggesting a  percent increase in investment in CV programs offered by MNCs such as IBM and Glaxo Smithkline over the past ten years (Pajo and Lee, ; Murray, ). Significant growth appears to have been experienced since the s, with Brockner reporting how employee volunteer hours grew by  percent between  and  (Brockner et al., ). In the UK and US, this growth has occurred alongside increasing government interest in the potential role that corporations might play in civil society, particularly in light of the shrinking role of the state and subsequent withdrawal of funding from the public and other sectors (Brockner et al., ; Brooks and Schlenkhof-Hus, ). Involvement on the part of employees in CV programs is even more difficult to pinpoint. According to the London Benchmarking Group, only  percent of employees took advantage of their companies’ volunteering programs in , rising to  percent

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in  (Corporate Citizenship, , ). Clearly, participation in CV opportunities is an important element of their effectiveness, and this has significantly influenced the academic research, much of which focuses on the motivation of those who are involved (do Paço and Nave, ; Ertas, ; Grant, ).

Nature of CV Activities The growing number of volunteering activities can be categorized in terms of time (long term vs. short term), input (skills vs. non-skills based), delivery channel (real vs. virtual), formality (formal vs. informal), organization (groups vs. individual), and place (domestic vs. international). Short-term assignments, such as community challenge days, team volunteering events, and one-off activities such as volunteering at the local homeless charity or local school, are less favoured by NFPs. Instead, they prefer longterm commitments, such as volunteering as a board member of a non-profit organization, mentoring and coaching activities, or working to achieve specified outcomes on longer term projects (Murray, ; Samuel et al., ). Non-skills based volunteering is increasingly being replaced by skills-based volunteering, whereby the employee is targeted for the professional skills that they can offer, such as project management, IT, and finance (Allen, ). Increasingly, organizations are offering pro bono opportunities, whereby staff members offer highly specialized technical skills (such as legal or accounting skills) for free or at significantly reduced rates (Cycyota et al., ). Formal volunteering is used to refer to CV programs that are established and managed by businesses as an integral part of their CR or formal business strategy. At the most strategic level, they may involve developing partnerships with specific NFPs in an attempt to make a significant impact on the target community over the longer term (Allen, ). Examples include assignments that improve educational attainment or more efficient resource utilization in developing countries, which could entail a succession of volunteers from different parts of the business at varying times (Arulrajah, ). Virtual volunteering is growing in popularity as companies and employees see the benefits of contributing their skills without the expense or time commitment that is involved in extensive travel. Programs include offering volunteers to help in web design, social media strategy, translation, accounting, and research. However, virtual volunteering can also include more personal encounters, such as web-based tutoring that remotely pairs employees with students in disadvantaged circumstances. Many volunteering activities comprise a mixture of both virtual and face to face media. Some companies consciously use CV as a mechanism to promote internal networking and the expansion of volunteers’ social capital by sending out larger numbers of volunteers to work in teams. IBM’s CSC scheme involves groups of around twenty to thirty volunteers visiting a country together, who split into smaller teams in order to complete a variety of projects with different beneficiary organizations (Murray, ). At the other

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extreme, companies send out individuals to work on a project, and these individuals do not meet other volunteers in the company before, during, or after the assignment. Finally, there is a distinction between volunteering that is carried out in the home country, versus international assignments. The latter may be employed as powerful tools to develop important leadership skills, such as cultural empathy, a global mindset, and globally responsible leadership (Pless et al., , ). Looking back at this brief overview of CV, although statistics are somewhat imprecise and further rigorous research is needed, it is safe to conclude that CV programs have grown significantly from their early manifestations in the s, with a strong rise since the early s. It appears that, in the US and UK, upwards of  percent (possibly as many as  percent) of smaller companies offer CV programs, rising to  percent for Fortune /FTSE  companies. Again, whilst they appear particularly popular in Anglo-American countries, there is also evidence of spread throughout Europe, Africa, Latin America, and Asia, in part due to the global reach of the companies that most promote them. The obvious question raised by these trends is why CV programs are so popular. The academic research in the area offers some answers to this question.

A R F

.................................................................................................................................. According to Rodell et al., (), academic research in the area of CV has risen quite steeply, leading to a general consensus that companies, as well as employees, derive considerable benefits from these schemes. For companies, this includes recruitment advantages, talent management tools, and reputational enhancement. Employees experience increases in motivation, skills, performance, morale, and self-esteem. This section will investigate the research showing the outcomes of CV at both the individual and organizational level, and in so doing, summarize the dominant narrative that helps to explain the growing popularity of CV.

Outcomes of Volunteering at the Organizational Level Research has investigated the potential outcomes of CV programs at the organizational level, with a particular focus on staff recruitment and retention, organizational commitment, leadership development, organizational performance, and stakeholder reputation. Recruitment advantages may be observed for employees of all ages, but most research has focused on millennials who seem more likely to be attracted to companies that run CV programs and may be deterred if companies fail to offer these opportunities (Ertas, ; Jones et al., ). According to the  Deloitte Volunteer IMPACT survey,  percent of millennials take into account the company’s commitment to the community when choosing an employer, with CV programs being one of the most visible activities in companies’ community engagement strategies (Deloitte Development, ).

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Although research consistently suggests recruitment advantages for companies strongly committed to CV, little is known about the theoretical processes underlying the phenomenon. Jones et al. () drew on signaling theory in order to investigate why potential recruits would be attracted by organizations committed to community engagement (which included CV activities) and environmental protection. They found evidence for three primary mechanisms: perceived value fit between employer and new hire; anticipated pride taken by being associated with the prospective employer; and a positive perception regarding how employees would be treated in such a company. A number of studies have demonstrated the links between engagement in their company’s CV scheme and higher levels of organizational commitment (Allen, ; Brockner et al., ; Peterson, ; Rodell et al., ), as well as higher levels of job satisfaction, job meaningfulness, morale, and intention to stay (Caligiuri and Thoroughgood, ; Gatignon-Turnau and Mignonac, ; Jones, ; Rodell, ). A variety of theories have been utilized to explain, at least in part, some of these mechanisms, including organizational identification and social exchange theory (Jones, ), values-fit and self-integrity (Brockner et al., ), motivation theory (Clary et al., ; Hu et al., ), and social identity theory (Alahakone, ). Liu and Wai-Wai () found that companies quite consciously seek out wellknown NFPs in order to leverage their high reputational resources to influence both external and internal stakeholders. CV programs are often the most visible of the CR offerings and appeal more than many other initiatives to the “hearts” of both internal and external stakeholders. Jones et al. showed that CV initiatives impacted potential recruits’ attitudes far more significantly than initiatives in the area of environmentalism (Jones et al., ). Liu and Wai-Wai () found that an important stimulus behind the growth of CV lay in the power it has to appeal to employees’ emotions, and hence, promote awareness of the company’s CR activities and boost internal stakeholder reputation. However, if the company is seen as promoting CV purely for commercial gain, this is likely to reduce organizational commitment, at the same time as undermining many of the reputational benefits that would otherwise accrue. Hence a careful balancing act must be achieved (Gatignon-Turnau and Mignonac, ; see also the Chelsea Willness chapter in this volume). A more recent approach has seen the employment of international CV as a consciousness-raising experience designed to develop globally responsible leaders who are more attuned to the complex systemic problems around global poverty and social injustice (Gitsham, ; Pless and Borecká, ). Responsible leadership development programs typically incorporate a CV experience, preceded by some leadership training, and followed by a period of “sensemaking” on return to the organization. Studies have shown that these are effective at developing core global leadership competencies (Pless and Borecka, ; Wallis and McHenry, ). Research conducted by Pless et al. () showed increases in global leadership competencies including responsible mindset, ethical literacy, cultural intelligence, global mindset, self-development development and community building. However, although more generic leadership competencies are developed, there is some evidence that participants find it difficult to transfer

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insights around corporate responsibility back to the workplace (Blakeley and Higgs, ; Ketola, ). When it comes to investigating the connections between CV and corporate performance, very little research has been conducted. Most of the work done in this area makes the link between increases in individual organizational commitment, morale, job performance, well-being, and higher organizational performance. A few studies have investigated the links between companies appearing in indicators such as  Best Companies to Work For, FTSE for Good, Global  most sustainable companies in the world, and Dow Jones Sustainability Index and have found relationships between appearing in these listings and superior financial performance (Cycyota et al., ; Case Foundation, ; and see Rodell et al., , for a review). However, Allen () cautions against expecting simplistic cause-and-effect relationships between high levels of community engagement and organization performance, and while there may be calls for further research in this area (Rodell et al., ), there are also downsides to this focus on measuring beneficial business performance, which I will address later.

Outcomes of Volunteering at the Individual Level Outcomes of volunteering for participants can be divided into career and personal benefits. Career benefits include increases in performance; job-related knowledge and skills; employer recognition; self-efficacy; job satisfaction; and organizational commitment (Cycyota et al., ). Personal benefits include increases in non-job-related knowledge and skills, self-esteem, sense of meaning and purpose, self-integrity, wellbeing, and sense of belonging. Indeed, the personal and spiritual benefits of volunteering go deep, and would be difficult to cultivate in other organizational contexts. Brockner et al. () identify three core personal benefits: increases in esteem, identity, and control. Esteem indicates the experience of feeling good about oneself. Identity refers to reinforcing one’s individual and social identity as someone who “gives back” to society. Control denotes the feeling that one has done something to make the world a better place (Brockner et al., ). Research conducted by professional and membership bodies also indicates a number of individual benefits, including increased confidence, the development of a wide range of skills including project management, coaching, negotiation and conflict resolution, communication and leadership skills. Volunteers report having developed higher levels of confidence, well-being, a broader awareness of social issues, and higher levels of empathy and understanding of others (Boccalandro, ; CIPD, ; Deloitte Development, ). Further, there is evidence for increased health benefits for volunteers (Allen, ; Post, ). There are clearly more subtleties to these findings. For example, job performance is affected by the quality of the volunteering experience, increasing when the learning gained from the CV experience is high (Hu et al., , ). The volunteer also needs to feel supported, to be provided with the resources to do the job effectively, and the

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work itself must be perceived as meaningful, contributing to the long-term sustainability of the partner (Caligiuri and Thoroughgood., ). Organizational commitment may be reduced when the company is viewed as engaging in CV for the purposes of public relations and reputation management (Gatignon-Turnau and Mignonac, ; see also the Chelsea Willness chapter in this volume). It may also be that employees with different motivations gain different benefits. Research has shown, for example, that those with other-oriented drivers, such as values and pro-social personality, tend to experience higher levels of self-integrity following participation in a CV program, which then leads to greater organizational commitment (Brockner et al., ). It would seem logical that those with self-oriented motives (such as career building, skills acquisition, or reputation enhancement) might experience different benefits, such as greater employer recognition and increases in performance. But further research is needed. In sum, it appears that volunteering involves considerable advantages for individual employees, both material and personal. Many studies demonstrate how both the career and personal benefits that are experienced by employees generate significant organizational returns, such as increases in performance, morale, organizational citizenship, and organizational commitment. However, an obvious voice that is missing in all this research is that representing the beneficiary organizations on the receiving end of these activities. We do not know what impact all this activity has on the recipients of these projects, and little research has set out to investigate this complex issue. There are other problematic critiques of CV that are missing from the debate. These include the politicization of volunteering in general, and CV in particular, in addition to the whole framing of this debate within the business performance discourse. It is to these critiques that I now turn.

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The Dominance of the Business Case Discourse The framing of CV as a management tool that helps increase recruitment, retention, and performance diverts attention away from the need to evaluate the benefits for NFPs and beneficiary organizations. This can distort employees’ and managers’ understanding of CV, who increasingly see it as a management tool, rather than as an opportunity for businesses to give back to society and establish social legitimacy. Anecdotal and some academic evidence suggest that CR professionals are constantly called upon to legitimize CV in terms of the “business case” (Arli and Cadeaux, ; Caudron, ; Miller, ; Murray, ). This can be evidenced by the many third sector membership and lobbying groups promoting CV by drawing on the business case as the main framing mechanism—often at the expense of the ethical arguments for CV (McCallum et al., ).

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Searches of international and national charities through their online presence or occasional white papers reveal that CV is very much promoted in terms of the business benefits (e.g. Jarvis and Parker, ). Deloitte’s influential impact studies examine the impact of CV in terms of workplace environment, leadership skills, recruitment and retention, and employee engagement (Deloitte Development, ). Although NFP organizations do have to “sell” themselves to companies, and hence framing their services in this way is both predictable and understandable, this is not a minor point. Once CV is framed and understood within the business case paradigm, the ethical commitment and ethical discourse can be weakened, delegitimizing any arguments that seek to justify CV because it is the “right” and “good” thing to do (Swanson, ). Whilst the case for “win-win-win” is often stated (i.e. companies, employees, and NFPs all gain through CV activities), we have already seen how the majority of the academic effort and discourse framing has focused on the benefits that commercial organizations and their employees gain. Once this frame dominates, it affects how individuals within CR or HR departments construe their interventions. This leads them to focus their attention on initiatives and mechanisms that maximize benefit to the company and its employees, with a relatively weak concern for the impact and benefits for NFP partners (Arli and Cadeaux, ). And this will be understood as “normal”, supported by cultural mechanisms that make the framing of CR within an ethic of values-led responsibility difficult to contemplate or articulate (Swanson, ). The question then arises as to what occurs once the business case no longer makes sense due to exogenous factors such as a downturn in the economy, a market threat, or indigenous factors such as a change of senior management or quite simply “boredom” (Murray, , )? Even without these pressures, there is a constant temptation to reduce the costs of these programs, often by ensuring that a lot of the work is done virtually, and the immersion experience is reduced to the minimum time possible, with little exploration of the effects of these decisions on beneficiary organizations (Samuel et al., ). To be sure, more reputable organizations such as CECP do frame CV within the narrative of business benefitting society (CECP, ). But this is more because it is a “good thing to do,” rather than a recognition of the increasingly concentrated political power of business and the simple fact that, without significant commitment from business, many of our most challenging global problems simply will not be addressed. Hence, CV is often viewed through a “philanthropic” lens rather than through a “responsibility” lens. It is seen as doing a favor to society, rather than as a responsibility or duty, compensating for social, economic, and political effects to which the business sector, in some part, has caused (Hatfield Edwards, ). Going further, Smith and Laurie () argue that the international volunteering discourse is ignoring a longestablished discipline and profession based upon development economics. Instead of exploring the complex, systemic effects of volunteering interventions on a broad range of stakeholders, CV is assessed unproblematically in terms of its benefits for the individual employee and the employer. Driven in part by new partnerships between the state, the corporate sector, and civil society, this reframing of “development”

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ignores much of what is known and contested within developmental studies. For example, proponents of CV tend to take global inequality for granted. Further, they redefine what constitutes “success” in volunteering programs (focusing on the benefits for corporates), and tend to promulgate technocratic solutions to complex, systemic issues around poverty and social injustice. Development professionals bringing “longterm anthropologically informed approaches” are replaced by “shorter term experiences defined both by locally articulated but universally endorsed professional skills needs” (Smith and Laurie, , ). These are serious criticisms that are notably absent in many of the business-oriented journals that provide a home for much of the academic research in this arena. The Third Sector Voice Perhaps the most serious critique of the academic literature is the missing voice of the third sector. One of the few pieces of research to address the issue as an “issue” (rather than conducting research to address the problem) identified three significant barriers to conducting research on the impact of CV (and of CCI activities more broadly): () lack of interest from senior management; () the difficulty in conducting such research; and () the cost in terms of time, money and resources that such research entails (Arli and Cadeaux, ). Although this is understandable in terms of the corporate mindset, it is perhaps surprising that very little academic research has been aimed at assessing impact or investigating the experience of the third sector. It is not difficult to surmise that this missing voice reflects a lack of power that such stakeholders wield in this debate, which is itself problematic. Caligiuri and Thoroughgood () did conduct some research into the NFP experience and showed that when the CV interventions successfully address an immediate problem, while at the same time increasing the capacity of the NFP to sustain this impact, CV is highly valued by the recipient. The problem is that very little is known as to how many and what kinds of CV activities actually achieve these outcomes. Samuel et al. (), in a recent exploratory study of five NFP organizations, revealed that the primary advantages of CV were to be found in the novelty afforded by the changes in routine involved when bringing in new volunteers from a very different environment. The NFPs and their users appreciated the interest taken in them and their work, the contact with the “outside world,” and relief from the “boring” routine. Although extra volunteers enabled the recipient to improve their offerings and services, and in some cases deepen their connections with their local community, there was general disillusionment that the volunteers did not sustain their relationship with the NFP. Tellingly, they did not seem to follow up their experience by generating further financial support (Samuel et al., ). This suggests that, whilst appreciated at the time, the impact of CV on NFPs can be transitory and somewhat disappointing. However, this was a small, unrepresentative sample. There is also evidence of more strategic forms of CV making a significant difference in people’s lives in situations of crisis or endemic poverty (Arulrajah, ), or when the skills that are offered address the nature of the problem, as in IBM’s contribution to the Smarter Cities initiative (Murray, ).

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Allen () is another of the few researchers to incorporate the third sector voice, and his findings are somewhat surprising. He identified eight barriers within NFPs to CV. The first barrier is largely attitudinal, in that there can be a general resistance within NFPs to utilizing volunteers, as some employees in this area find incorporating volunteers a deep (though possibly subconscious) threat to their professional identity. NFP employees are faced with the threat that largely untrained volunteers seem to be able to do their jobs as well as they can (Allen, ). Looking at identity through a national lens, what does it imply if we need to fly in “talent” from the other side of the world, rather than tap into more local sources of knowledge and skill? For example, does an NFP in the centre of Sao Paolo have to look to London in order to avail itself of advanced project management skills? Not only might employees within the NFP feel disempowered, but the subtle message being conveyed is that these skills are not available locally, and that in some way, the employees in the West are far more skilled and advanced than professionals in the host country. Rather than send out a project manager from London to conduct a oneoff project for a week, would it not be much better to gain access to a local volunteer who can give an NFP long-term commitment and simultaneously upskill their staff? Research by Liu and Wai-Wai () and Allen () shows that what NFPs most seek is a long-term relationship with a corporate partner in order to help them increase their operational capacity and effectiveness over an extended period of time. This is something that a one-week assignment with a volunteer living halfway across the world would be difficult to accomplish. Other barriers to CV from the NFP perspective include the lack of capacity to manage the volunteer. For example, there is often a lack of advanced planning; poor project management; inability to delegate work; and an inability to utilize the volunteer’s specific skillset. There is also a steep learning curve for volunteers, particularly in short one-off projects. In addition, a lot of time is needed to find the right volunteers, and then make them effective. Finally, there is a lack of capacity to measure the impact of the voluntary intervention (Allen, ; Deloitte Development, ). Hence, in addition to the more philosophical and political problems already mentioned, there are clear managerial problems for NFPs incorporating CV initiatives into everyday practices, and we do not understand enough about these issues.

Political Role of CV: CV as a Tool for Reducing Government Expenditure A broader social, political, and economic agenda appears to underpin the popularity of volunteering in general, and CV in particular. The global volunteering organization “Points of Light”, according to their own website, is the largest organization in the world dedicated to facilitating volunteering in all its forms, including CV. It was established in  by President Bush, with each subsequent American President

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playing a role in supporting and promoting its activities (Points of Light, ). Much later, in the UK, the  Cameron government attempted to promote a set of policies under the umbrella of the “Big Society” in order to encourage wider volunteering, including CV, in society. This was quickly dropped following extensive criticism that it was a means of using employees as unpaid labor in order to replace skilled and unskilled jobs in the public sector with the simple intention of saving government money (Slocock, ). It is notable that both initiatives were seeded by governments with an ideological commitment to the shrinking of government and to the reduction of financial support for the public and third sectors. More recently, the UK Conservative government (again ideologically committed to a small state and free-market policies) planned to bring into law a requirement that UK companies with over  employees allow employees at least three paid volunteering days per year in addition to their annual holiday entitlement (Darlington, ). At least in this instance, government is not attempting to use or force unpaid labor. According to Snell and Wong (), governments around the world are increasingly aware of the economic advantages that are delivered by volunteering, and are adopting a range of policies to encourage it, whilst simultaneously withdrawing from many of their own public sector commitments (MacPhail and Bowles, ). One report estimated the value of volunteering in terms of labor input to be around . percent of GDP (CIPD, ). In part, this reflects the fact that the roles of public, private, and third sector actors are changing and becoming blurred. But although collaboration between government, the private, and the third sectors is increasingly common, this is often formalized via strict service level agreements requiring charities to devote considerable managerial and financial resources to demonstrate evidence of impact (Plewa et al., ). This outsourcing of services often involves redundancies of professional staff and their replacement with lower paid contractors or “free” volunteers. At the same time, governments are reducing their financial support for voluntary organizations, particularly for small and medium-sized charities (Brooks and Schlenkhof-Hus, ; Plewa et al., ). It is hardly surprising that many charities cite their main need as quite simply money (Allen, , ), and although some forms of CV might directly appear to save money (e.g. pro bono services of specialized staff such as lawyers, and IT professionals and accountants), for others, the financial benefits are somewhat more obscure. At the same time, it is costly for NFPs to dedicate valuable and scarce time to managing volunteers, a point that is rarely investigated in the literature. All in all, it is apparent that governments are increasingly relying on the third sector to deliver services on their behalf as a means of saving money, and at the same time calling on companies to release staff in order to support these policies. This introduces significant instability and cost to the third sector, since they rely on volunteers, who in addition to taking time and resources, are “unknown quantities” both in terms of their skills and their ability to adapt quickly in order to make a significant contribution. Furthermore, the increasing reliance on government and corporate support may reduce the independence of the sector, compromising their ability to critique those

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bodies that are the source of their funds. Through these means, government transfers the risk of service failure to the NFP, at the same time cultivating compliant, risk-averse behaviors, lack of innovation, and inhibition of the NFP’s capacity to become an independent voice for the stakeholders that they represent (Milbourne and Cushman, ). Finally, like many initiatives, CV may be susceptible to becoming a “fad”. Although the numbers of companies offering CV has been rising since the s we do not know what the pattern looks like specifically over the past five or ten years. The  Deloitte Impact report, for example, suggests that general volunteering amongst employed individuals within the US recently reached a ten-year low, which may (or may not) reflect a pattern yet to manifest in the corporate arena (Deloitte Development, ). Allen () suggests too that there is a danger of CV becoming a fashion with companies adopting it in order to emulate their peers, rather than due to principle or even due to its perceived corporate benefits. As long as the legitimacy of CV is rooted within the performativity agenda, it is much more likely that, once the benefits are perceived as no longer forthcoming or are superseded by a different, perhaps less costly, initiative, it remains vulnerable to cuts or to being withdrawn altogether. This kind of leadership, narrowly focused on economic and performance criteria, is what Pless et al. () refer to as “traditional economists” or “opportunity seekers” in their typology of responsibility orientations.

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.................................................................................................................................. Our current knowledge of CV, whether derived from academic or practitioner sources, supports its role as an important offering in the CR toolbox. CV delivers recruitment, retention, engagement, and reputational benefits for companies, as well as personal, career, and developmental advantages to individuals. For large corporations, this is an important HR and talent management tool, which has grown in popularity over the past thirty years and is spreading throughout the globe. It is less popular within SMEs, possibly due to resource constraints. It is increasingly seen as an important means for governments around the world to deliver a range of services at significantly reduced costs, with at least one government considering introducing legislation to mandate a number of volunteering days that companies offer their employees. Trends within CV suggest that there is a shift in favor of high-level, skills-based volunteering and more virtual interventions. Research demonstrates that the beneficial effect of CV for individuals is highest when employees perceive that they have made a demonstrable, sustainable impact, and when the employer is seen to be promoting CV as a result of pro-social, as opposed to more instrumental motives. However, while we are relatively well-informed as to the individual and corporate benefits of CV, or in identifying the personal motivations for volunteering, there are

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significant gaps in our knowledge relating to some vitally important areas. For example, we need to investigate, using robust methodologies, the extent to which CV is both offered and taken up, particularly within SMEs. Figures vary widely, and it will be informative to study the trends, partly to identify whether CV remains a permanent, sustainable and important part of the CR mix, or whether it begins to fade in popularity— particularly in the face of a lack of robust evidence regarding its impact for NFPs. More crucially, if CV is to become part of government policy, much more research is needed in order to identify its impact on the beneficiaries, particularly in relation to different kinds of intervention, or what seems to work best in various contexts. Currently, and somewhat mysteriously, CV is viewed as a “free” service for the notfor-profit sector, and yet clearly it involves significant amounts of staff time and resources. What is the return on investment for the recipient of CV? As governments demand more evidence of “impact”, it is incumbent on academics to move their attention to this tricky and complex area, which would yield far more significant results than yet another study investigating the benefits of CV for multinational corporations and their staff. This offers numerous opportunities for academics. Quantitative surveys, in-depth case studies, ethnographic, and grounded approaches could all yield useful insights. A further issue emerges if governments are going to increasingly rely on CV as part of social policy. That is, how do we sustain volunteering in order to strengthen and deepen individual and corporate commitment to this new role? Whatever the political arguments, there is a logic to involve companies in delivering services on a voluntary basis in that it openly acknowledges the political role of the corporation (Fuchs, ; Scherer and Palazzo, ). The share of wealth that large corporations now control has increased significantly over the past three decades (Harvey, ). Their power and influence is manifested overtly in their control over technology, communication networks, scientific innovation, the media, logistics, and less overtly in the significant lobbying and political activities that they undertake (Scherer and Palazzo, ). Corporations are political actors whether they acknowledge this role or not. Hence, a more overt role in delivering services would serve to bolster their licence to operate in a world where, according to some, they hold too much power and concentrate that power (and wealth) in too few hands (Scherer et al., ). Corporations need to view their commitment to CV as part of their licence to operate; that is, part of their responsibility to society, rather than as a discretionary tool that they wield as long as it is seen to yield business benefits. This brings us to the interesting dilemma surrounding CV in that it has been framed predominantly through the lens of corporate performance. As long as it delivers benefits for corporations, its status is safe. Yet, as the practice spreads, the marginal utility of CV will inevitably decline. That is, it will hardly serve as a competitive recruitment or retention tool if everybody is offering it (though, of course, its lack will serve as a deterrent to potential recruits). As long as CV is viewed solely through the lens of business benefit, its status will be vulnerable to the whims of economic, political, and financial forces. Clearly, it is difficult for academics to promote the

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normative argument behind CV and attract the attention of the very people who may need to hear it. But the framing of any discourse is important. If CV is to become a permanent part of CR and social policy, we need to treat it accordingly, measuring its impact, strengths, weaknesses, costs, and benefits for all stakeholders. Companies need to commit to it on a sustainable basis by investigating how it can embed CV in the home country, and employ the skills of volunteers on a long-term, strategic, and sustainable basis to make a difference to the quality of life of all peoples.

R Alahakone, R. . Corporate volunteering: An analysis of the drivers, mediating mechanisms and outcomes. Doctoral dissertation. Kingston University, Kingston, UK. Allen, K. . The Big Tent: Corporate Volunteering in the Global Age. Madrid: Fundacion Telefonica and Ariel. Arli, D., and Cadeaux, J. . Drivers of corporate community involvement and challenges in measuring its impact. Social Responsibility Journal, (), –. Arulrajah, A. A. . The role of corporate volunteerism in a wider socioeconomic context: A review of literature. IUP Journal of Management Research, (), –. Basil, D., Runte, M., Basil, M., and Usher, J. . Company support for employee volunteerism: Does size matter? Journal of Business Research, (), –. BITC. . Volunteering brings benefits to business and employees. . Blakeley, K., and Higgs, M. . Responsible leadership development: Crucible experiences and power relationships in a global professional services firm. Human Resource Development International, (), –. Boccalandro, B. . Mapping Success in Employee Volunteering: The Drivers of Effectiveness for Employee Volunteering Giving Programs and Fortune  Performance. Boston: Boston Center for Corporate Citizenship. Boyd, T. D. . Involvement corps matches corporate employees to social needs. Management Review, (), –. Brockner, J., Senior, D., and Welch, W. . Corporate volunteerism, the experience of selfintegrity, and organizational commitment: Evidence from the field. Social Justice Research, (), –. Brooks, K., and Schlenkhof-Hus, A. . Employee volunteering: Who is benefiting now? . Brudney, J. L., and Gazley, B. . Moving ahead or falling behind? Volunteer promotion and data collection. Nonprofit Management and Leadership, (), –. Caligiuri, P., and Thoroughgood, C. . Developing responsible global leaders through corporate-sponsored international volunteerism programs. Organizational Dynamics, (), –. Case Foundation. . Can corporate volunteering support the bottom line? The challenge. The opportunity. The case for investment. .

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 :    ?

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Caudron, S. . Volunteer efforts offer low-cost training options, Personnel Journal, (), –. CECP. . The CEO force for good: Creating a better world through business. . CECP. . CECP giving around the globe:  edition. . CIPD. . From Big Society to the Big Organization? The Role of Organizations in Supporting Employee Volunteering. London: CIPD. Clary, E. G., Ridge, R. D., Stukas, A. A., Snyder, M., Copeland, J., Haugen, J. and Miene, P. () Understanding and assessing the motivations of volunteers: A functional approach. Journal of Personality and Social Psychology, (), –. Corporate Citizenship. . The LBG Annual Review . . Cycyota, C. S., Ferrante, C. J., and Schroeder, J. M. . Corporate social responsibility and employee volunteerism: What do the best companies do? Business Horizons, (), –. Darlington, L. . Three days’ paid volunteering leave: Conservative manifesto pledge updates. . Deloitte Development. . Deloitte/Points of Light  volunteer impact study: Executive summary. . Deloitte Development. .  executive summary: Deloitte volunteer impact survey. . Deloitte Development. .  Deloitte impact survey: Building leadership skills through volunteerism. . Deloitte Development. . Deloitte volunteer impact research. . do Paço, A., and Nave, C. A. . Corporate volunteering. Employee Relations, (), –. Ertas, N. . Millennial and volunteering sector differences and implications for public service motivation theory. Public Administration Quarterly, (), –. Fuchs, D. . Commanding heights? The strength and fragility of business power in global politics, Millennium: Journal of International Studies, (), –. Galia, R. . The transformed identity of a banking corporation’s employees, s–s. Journal of Public Affairs, (), –. Gatignon-Turnau, A.-L., and Mignonac, K. . (Mis)Using employee volunteering for public relations: Implications for corporate volunteers’ organizational commitment. Journal of Business Research, (), –. Gitsham, M. . Experiential learning for leadership and sustainability at IBM and HSBC, Journal of Management Development, (), –. Grant, A. M. . Giving time, time after time: work design and sustained employee participation in corporate volunteering. Academy of Management Review, (), –. Hall, P. D. . Business, philanthropy, and education in the united states. Theory into Practice, (), –. Harvey, D. . A Brief History of Neo-Liberalism. Oxford: Oxford University Press.

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

 

Hatfield Edwards, H. . Social responsibility and the evolution of corporate philanthropy: An analysis of successful corporate-cause partnerships in an era of the global corporate citizen. PRism, (), –. Hu, J., Jiang, K., Mo, S., Chen, H., and Shi, J. . The motivational antecedents and performance consequences of corporate volunteering: When do employees volunteer and when does volunteering help versus harm work performance? Organizational Behavior and Human Decision Processes, , –. Hudson, M. . Managing without Profit: Leadership, Management and Governance of Third Sector Organisations (rd ed.). London: Directory of Social Change. Jarvis, C., and Parker, A. . The Business Benefits of Corporate Volunteering: An Examination of the Business Benefits Resulting from the Effects of Employee Volunteer Programs. Toronto: Realized Worth. Jones, D. A. . Does serving the community also serve the company? Using organizational identification and social exchange theories to understand employee responses to a volunteerism program. Journal of Occupational and Organizational Psychology, (), –. Jones, D. A., Willness, C. R., and Madey, S. . Why are job seekers attracted by corporate social performance? Experimental and field tests of three signal-based mechanisms. Academy of Management Journal, (), –. Ketola, T. . Losing your self: Managerial persona and shadow pressures killing responsible leadership. Journal of Management Development, (), –. Lee, Y., and Brudney, J. L. . Work-to-society spillover? Volunteering by employees of non-profit organizations. Nonprofit Management and Leadership, (), –. Liu, G. and Wai-Wai, K. () Social alliance and employee voluntary activities: A resourcebased perspective, Journal of Business Ethics, (), –. McCallum, S., Schmid, M. A., and Price, L. . CSR: A case for employee skills-based volunteering. Social Responsibility Journal, (), –. MacPhail, F., and Bowles, P. . Corporate social responsibility as support for employee volunteers: Impacts, gender puzzles and policy implications in Canada. Journal of Business Ethics, (), –. Milbourne, L., and Cushman, M. . From the third sector to the big society: How changing UK government policies have eroded third sector trust. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, (), –. Miller, W. H. . Volunteerism: A new strategic tool, Industry Week, , –. Murray, S. . Big Blue volunteers. Stanford Social Innovation Review, (), –. Pajo, K., and Lee, L. . Corporate-sponsored volunteering: A work design perspective. Journal of Business Ethics, (), –. Peterson, D. K. . Recruitment strategies for encouraging participation in corporate volunteer programs. Journal of Business Ethics, (), –. Pless, N. M., and Borecká, M. . Comparative analysis of international service learning programs. Journal of Management Development, (), –. Pless, N. M., Maak, T., and Stahl, G. K. . Developing responsible global leaders through international service-learning programs: The Ulysses experience. Academy of Management Learning and Education, (), –. Pless, N. M., Maak, T., and Waldman, D. A. . Different approaches toward doing the right thing: Mapping the responsibility orientations of leaders, Academy of Management Perspectives, (), –.

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 :    ?



Plewa, C., Conduit, J., Quester, P. G., and Johnson, C. . The impact of corporate volunteering on CSR image: A consumer perspective. Journal of Business Ethics, (), –. Points of Light. . Our history. . Post, S. . Altruism, happiness, and health: It’s good to be good. International Journal of Behavioral Medicine, , –. Ragged University. . Education history: A brief history of ragged schools. . Rodell, J. B. . Finding meaning through volunteering: Why do employees volunteer and what does it mean for their jobs? Academy of Management Journal, (), –. Rodell, J. B., Breitsohl, H., Schröder, M., and Keating, D. J. . Employee volunteering. Journal of Management, (), –. Samuel, O., Roza, L., and Meijs, L. . Exploring partnerships from the perspective of HSO beneficiaries: The case of corporate volunteering. Human Service Organizations: Management, Leadership and Governance, (), –. Scherer, A. G., and Palazzo, G. . The new political role of business in a globalized world: A review of a new perspective on CSR and its implications for the firm, governance, and democracy. Journal of Management Studies, (), –. Scherer, A. G., Palazzo, G., and Matten, D. . The business firm as a political actor: A new theory of the firm for a globalized world. Business and Society, (), –. Slocock, C. . What happened to David Cameron’s ‘Big Society’? Huffington Post, Jan. . . Smith, M. B., and Laurie, N. . International volunteering and development: Global citizenship and neoliberal professionalisation today. Transactions of the Institute of British Geographers, , –. Smith, M. K. . Ragged schools and the development of youth work and informal education. The Encyclopaedia of Informal Education, Retrieved from . Snell, R. S., and Wong, A. L. Y. . Conservative transformation: Actively managed corporate volunteerism in Hong Kong. Asian Journal of Business Ethics, (), –. Swanson, D. . Top managers as drivers for corporate social responsibility. In A. Crane, A. McWilliams, D. Matten, J. Moon, and D. S. Siegal (eds), The Oxford Handbook of Corporate Social Responsibility, –. Oxford: Oxford University Press. Wallis, S. M., and McHenry, J. J. . Corporate volunteerism as an avenue for leadership development. In C. D. McCauley, D. S. DeRue, P. R. Yost, and S. Taylor. (eds), ExperienceDriven Leader Development, –. Hoboken, NJ: John Wiley and Sons. Online Wiley Publication. Zappala, G., and McLaren, J. . A functional approach to employee volunteering: An exploratory study. Australian Journal on Volunteering, (), –.

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  ......................................................................................................................

          The Nature, Measurement, and Contextual Antecedents of CSR and CSiR by Organizations ......................................................................................................................

 

I

.................................................................................................................................. C social responsibility (CSR) has evolved from a debate about whether firms should be responsible for more than just profits to a discussion about how firms can be profitable while obeying the law, respecting people and communities, and preserving the environment (Carroll, ; Crook, ; Frederick, ; Matten and Moon, ; Mohn, ; Porter and Kramer, ; Wang et al., ). Nevertheless, corporate social irresponsibility (CSiR) occurs even in companies that exhibit CSR (Dans, ; Riera and Iborra, ). Examples of CSiR are wide-ranging, including oil spills (e.g. Moss, ), misrepresenting the environmental benefits of products (Dans, ; Gelles, ; Lane, ), unsafe working conditions (e.g. Kernaghan, ), labor exploitation (e.g. Mosbergen, ), sexual harassment (Benner, ; Hess, ), unethical sales practices (Egan, ; Johnson, ), and accounting scandals (Bray, ; Jones, ). The organizations involved in some of these events even had reputations for their CSR achievements. However, research has shown that organizations may be motivated to engage in CSR as a way to camouflage, offset, or compensate for prior or future CSiR (Brammer and Pavelin, ; Jia and Zhang, ; Kang et al., ; Kotchen and Moon, ; McMahon, ; Muller and Kräussl, ; Ormiston

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  



and Wong, ; Perks et al., ). Furthermore, it has been argued that CSiR is inevitable as organizations grow and diversify in spite of their CSR intentions or record (Strike et al., ; Surroca et al., ). It is not surprising that scholarly interest in CSiR has risen in part due to its association with CSR (Armstrong and Green, ; Lange and Washburn, ; Lin-Hi and Muller, ; Riera and Iborra, ; Strike et al., ; Windsor, ), but also due to the potential costs of these events for people, communities, the environment, and businesses themselves. The chapter reviews the research on CSiR. It begins with a description of the nature of CSiR. This section provides an overview of the evolution of the CSiR construct from the early days of Armstrong () to the present day. The second section covers the measurement of CSiR. The factors that are relevant to the measurement of CSiR mirror closely those for CSR. Thus, this section references some of that literature (including corporate social performance). The third section focuses on some situational antecedents of CSiR including time pressure, incentive systems, organizational climates, organizational culture, leadership, governance, regulation, and CSR itself. These factors operate at a level where support for CSR or the deterrence of CSiR is crucial and can play a pivotal role (Delmas and Burbano, ; Greve et al., ; Surroca et al., ; Windsor, ; Wood, ). However, the causal association between several of these factors and CSiR is difficult to establish given the limitations of the data that are available for research, the research designs employed, not to mention the complexity of the constructs themselves. Thus, several of the findings lend support to relationships among several of the antecedents and CSR or CSiR but do not necessarily permit causal inference. In addition, this section reviews several studies of CSR in addition to CSiR due to measurement overlap of these constructs and their interrelationship. Lastly, the research that is reviewed under antecedents leans a little more towards environmental sustainability due to recent CSR or CSiR research focused on this dimension. Typically but not solely, the chapter references research and related work published over the last five to ten years, which covers the time period since the last edition of this Handbook. The chapter concludes with recommendations for research and practice.

T N  C S I

.................................................................................................................................. Scott Armstrong wrote about the term social irresponsibility in  as he tried to make sense of the decisions that managers take when they assume exclusive responsibility to shareholders. He defined social irresponsibility as “a decision to accept an alternative that is thought by the decision maker to be inferior to another alternative when the effects upon all parties are considered” (Armstrong, , ). Employing experimental research designs, he found that strict adherence to the doctrine of shareholder theory and fiduciary responsibilities gave rise to socially irresponsible behavior. However,

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

 

in his studies, when managers adopted the perspective of different stakeholders (e.g. employees, customers) they were less likely to make socially irresponsible decisions. Armstrong’s definition of social irresponsibility continues to inform scholars and feeds into debate and discussion surrounding the conceptualization of CSiR (Fassin et al., ; Murphy and Schlegelmilch, ; Price and Sun, ; Putrevu et al., ; Riera and Iborra, ; Windsor, ). A little over a decade later, Lehman () wrote about social irresponsibility when he analyzed a state public college tuition program designed to protect against intergenerational social irresponsibility. Like Armstrong, Lehman’s definition of social irresponsibility incorporated the impact of actions on other parties and implied a degree of foresight on the part of the instigator: “situations in which self-interest is allowed to diverge from communal self-interest . . . actions that occur only because people do unto others what they would not do unto themselves” (Lehman, , ). Later in the s McMahon () linked social responsibility and social irresponsibility in his analysis of the Chrysler/Kenosha plant closing. McMahon defined social irresponsibility as simply the “antonym of social responsibility” (p. ). He wrote about the role that negative stakeholder reaction and pressure played (among other factors) in motivating Chrysler to reverse its original decision to offer no compensation to the parties affected by the plant closing (deemed to be socially irresponsible by stakeholders) to one where social and financial assistance were provided to several stakeholders (e.g. employees, the city, and citizens of Kenosha). The twenty-first century saw increased scholarly interest in social irresponsibility. One factor that contributed to the renewed interest was a desire to better explicate what CSR entailed by differentiating CSR from social irresponsibility, among other reasons (Christensen et al., ; Jones et al., ; Lin-Hi and Muller, ; Muller and Kräussl, ; Murphy and Schlegelmilch, ; Riera and Iborra, ; Strike et al., ; Voliotis et al., ; Windsor, ). It is one thing to engage in minimal or no CSR and it is another to engage in unethical, irresponsible, or illegal acts. Although some stakeholders may not perceive the former to be irresponsible behavior, there is little debate about the latter (Armstrong, ; Lin-Hi and Muller, ; Windsor, ). Thus, the question arises as to whether CSR and CSiR are opposite ends of the same continuum or distinct constructs. This question is reminiscent of similar earlier debates about the nature of individual-level organizational citizenship behavior (OCB) and counterproductive work behavior (CWB; or deviance). Research into the OCB/CWB question showed that, although they are negatively related, they are not strongly related. When this finding is combined with other research showing a different pattern and magnitude of some common correlates of OCB and CWB, the conclusion is reached that they are different constructs (e.g. Dalal, ; Kelloway et al., ; Sackett et al., ). Returning to the CSR/CSiR question, research has shown that engaging in CSR does not preempt an organization (or its leaders) from also engaging in CSiR (e.g. Jones et al., ; Lin-Hi and Muller, ; Muller and Kräussl, ; Murphy and Schlegelmilch, ; Voliotis et al., ; Windsor, ). The reverse also applies (e.g. Kang et al., ; Kotchen and Moon, ; Muller and Kräussl, ). Thus, most scholars, though not all, have settled on CSR and CSiR as distinct constructs.

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  

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The terms corporate social irresponsibility (CSiR) and corporate irresponsibility replaced social irresponsibility. Greenwashing (i.e. combination of “poor environmental performance and positive communication about environmental performance,” Delmas and Burbano, , ) and sustainability fraud (i.e. “fraud committed by sustainability managers with respect to their sustainability-related work,” Steinmeier, , ) were introduced in part to study wrongdoing that is specific to the sustainability perspective of CSR. Several scholars relied upon the earlier work of Armstrong when they defined CSiR in their research (Fassin et al., ; Murphy and Schlegelmilch, ; Putrevu et al., ), while a handful followed McMahon () and defined CSiR as the converse of CSR (Christensen et al., ; Perks et al., ). Other scholars chose to focus on a specific type of CSiR such as greenwashing or sustainability fraud (Delmas and Burbano, ; Steinmeier, ), corruption (Keig et al., ), human rights abuses (Fiaschi et al., ), retail CSiR (Wagner et al., ), or pollution (Jia and Zhang, ; Xie et al., ). Lange and Washburn () wrote about the subjective nature of CSiR and the important role that observer perceptions and expectations play in judgments of wrongdoing, suggesting that CSiR is in the eye of the beholder (stakeholders in this case). They describe three criteria that they believe need to be met for observers to make attributions of CSiR: the presence of an undesirable effect, corporate culpability for the said effect, and noncomplicity of the affected party. Thus, attributions of wrongdoing against an organization are made when it is deemed responsible for a negative event in which the victims do not have control over the event. Some scholars have adopted Lange and Washburn’s perspective by conceptualizing CSiR as whatever stakeholders consider to be socially irresponsible behavior (Coombs and Holladay, ; Whiteman and Cooper, ; Williams and Zinkin, ). Some researchers even advanced their own conceptualizations of CSiR (Herzig and Moon, ; Jones et al., ; Kotchen and Moon, ; Lin-Hi and Muller, ; Mazzei et al., ; Mena et al., ; Pearce and Manz, ; Riera and Iborra, ; Strike et al., ; Whiteman and Cooper, ), which are discussed next. This emerging body of work prompted reviews of the current state of CSiR scholarship. Lin-Hi and Muller () analyze twenty-two articles spanning  to , and Riera and Iborra () analyze twenty-five articles spanning  to . There are about ten articles in common between these two reviews. The current analysis considers all these articles from the reviews. Although most of the papers describe CSiR, not all of them provide an explicit definition. Table . provides a summary of CSiR definitions from this literature. There are nearly twenty unique definitions of CSiR or closely related terms (e.g. social irresponsibility), and many articles that do not necessarily advance their own definition cite one or more of these works (e.g. Ormiston and Wong, ). Several trends emerge from an analysis of these definitions. First, they refer to some type of bad, unethical, illegal, or inferior decision, event, or behavior. That is, someone makes a judgment. Given the broad scope and reach of CSiR, many different stakeholders can make a judgment of whether a behavior is irresponsible. As noted by Riera

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Table 8.1 Summary of CSiR and Related Terms Definition Social Irresponsibility “A social irresponsible act is a decision to accept an alternative that is thought by the decision maker to be inferior to another alternative when the effects upon all parties are considered” “situations in which self-interest is allowed to diverge from communal self-interest” “antonym of social responsibility” Corporate Social Irresponsibility “set of corporate actions that negatively affects an identifiable social stakeholder’s legitimate claims (in the long run)” “being reactive as opposed to proactive in addressing corporate issues and the ways and means by which they relate to wider society” “unethical executive behavior that shows disregard for the welfare of others, that at its extreme is manifested when executives seek personal gain at the expense of employees, shareholders and other organization stakeholders, and even society at large” “a set of actions that increases externalized costs and/or promotes distributional conflicts” “corporate actions that result in (potential) disadvantages and/or harm to other actors” “CSR refers to business responses to the expectations of society, and CSiR refers to business failures to meet these expectations” “antithesis of CSR” “contrary actions of unethical behavior that negatively influence society” “temporarily defined organization actions that cause harm to stakeholders” “the result of an intentional strategy—and is more than an isolated event of failure of the company’s socially responsible behavior—that damages the interests of its stakeholders, provoking individual and subjective perceptions of observers with partisan interest in the company” Greenwashing “intersection of two firm behaviors: poor environmental performance and positive communication about environmental performance” Sustainability Fraud “fraud committed by SMs with respect to their sustainability-related work”

Source

Armstrong, 1977, 185

Lehman, 1990, 1038 McMahon, 1999, 108 Strike et al., 2006, 852 Jones et al., 2009, 304 Pearce and Manz, 2011, 563

Kotchen and Moon, 2012, 2 Lin-Hi and Muller, 2013, 1932 Herzig and Moon, 2013, 1870 Christensen et al., 2014, 165 Mazzei et al., 2015, 163 Mena et al., 2016, 720 Riera and Iborra, 2017, 157

Delmas and Burbano, 2011, 65 Steinmeier, 2016, 477

and Iborra (), such judgment can be made by impartial observers who are disconnected from the organization, special interest groups (e.g. consumers), or partial observers (e.g. employees). A behavior may be judged irresponsible by some but not necessarily by all parties. Second, there is an outcome or consequence of the focal behavior or event, and it is bad, negative, or causing of harm. As noted by Lin-Hi and

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Muller, breaking the law is enough to constitute CSiR, but it is not necessary for CSiR to have occurred. That is, the outcome of corporate actions can be harmful to other actors even if the action itself is not illegal. Third, CSiR can be intentional or unintentional on the part of the organization or one of its agents. For example, an action can have unforeseen negative consequences or the organization may be unaware of CSiR occurring within its supply chain (Lin-Hi and Muller, ; Riera and Iborra, ). Furthermore, some stakeholders may even decide that an event or behavior is intentional (regardless of who commits it) simply because it is connected in some way to achieving the organization’s strategy (e.g. to maximize profit, diversify internationally; Riera and Iborra, ; Strike et al., ; Surroca, et al., ). That is, if negative behavior occurs that helps the organization achieve its goals and objectives, it can have a greater likelihood of being perceived as intentional. Fourth, the recipient of the negative, bad, or harmful outcome/consequence can be any one of a number of potential stakeholders, including the economy, society, or the organization itself. Fifth, some definitions explicitly state or imply that there is some expectation that the organization failed to meet. This analysis suggests some progress in defining CSiR with some degree of convergence on elements of the definition. Nevertheless, there is yet to be one widely adopted definition.

M  C S I

.................................................................................................................................. Corporate social irresponsibility (CSiR) is part of the broader domain of corporate social responsibility (CSR) and corporate social performance (CSP). These are heterogeneous complex concepts, making their measurement challenging, even impossible, depending upon the purpose for which the measure is being used (Carroll et al., ; Wood, ). Any discussion about the challenges involved in measuring CSiR will parallel some of the challenges in measuring CSR. Furthermore, the term corporate social performance (CSP) evolved out of CSR in an effort to address one of the limitations of measuring something that implies “motivation,” which “responsibility” is said to do (Wood, ). Thus, the discussion that follows will draw upon the literature on all of these concepts when relevant.

Unidimensional Proxy Measures One approach to measuring CSR/CSiR is as a single-dimension proxy that operationalizes it via a single example (e.g. product recalls, air pollution, or oil spills). One criticism of this approach is construct deficiency since it does not capture a firm’s performance on all relevant CSR/CSiR dimensions. This criticism is most applicable

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when the research uses such a measure to make generalizations about the firm’s standing within the broad domains of CSR/CSiR (Carroll et al, ; Rowley and Berman, ). Although a firm may score high/low on one dimension of CSR/CSiR, it is plausible that the firm scores significantly higher or lower on other dimensions of CSR/CSiR, leading to potential misrepresentations of the extent and degree of a firm’s social responsibility or irresponsibility.

Composite-Aggregate Measures Another approach to measuring CSR/CSiR is via a composite or aggregate measure of a firm’s performance on various dimensions of CSR/CSiR (e.g. the MSCI KLD  Social Index¹). Aggregate measures can be problematic especially when used for academic research purposes (Chatterji et al., ; Chatterji et al., ; El Akremi et al., ; Entine, ; Graafland et al., ; Hart and Sharfman, ; Rowley and Berman, ; Wood, ). Some criticisms of aggregation include that the process of rating companies on separate CSiR/CSR dimensions is susceptible to subjectivity and bias; absence of a theoretical rationale for combining different dimensions of CSR and or CSiR into a composite; and a lack of consideration of the context (e.g. industry or sector) when dimensions are aggregated.

Subjectivity Subjectivity is embedded in the process of rating the social performance of firms. Most ratings are prepared by socially responsible investment raters. Examples of some of these raters are: MSCI, Dow Jones Sustainability Indices (US), Calvert Responsible Indexes (US), Asset (Europe), Canadian Social Investment Database, Sustainalytics, ARESE (France), and FTSEGood Index Series (Europe), among others. The index that has been studied most often in the domain of CSR/CSiR to date is the Kinder, Lydenberg, and Domini Index (KLD)² (e.g. Carroll et al., ; Chatterji et al., ; Graafland et al., ; Hart and Sharfman, ; Kotchen and Moon, ; Mattingly and Berman, ; Sharfman, ; Waddock and Graves, ). Typically, socially responsible investment raters compile qualitative and/or quantitative data on firms based on the raters’ own definition or conceptualization of CSR. Some raters even apply screens early on in the process that remove firms from further consideration. For example, MSCI (formerly KLD Index) excludes firms that participate in certain industries (e.g. nuclear power,

¹ MSCI. (). MSCI KLD  Social Index (USD). Retrieved on May , , from https://www. msci.com/documents//aff-cfe-c-afde-ffcbf ² The KLD  index was renamed the MSCI KLD  Index, in addition to the renaming of other KLD indices in July  after the acquisition by MSCI; MSCI. (). Standard Announcements. Retrieved May , , from https://app.msci.com/webapp/index_ann/DocGet?pub_key=XPwoaUDZEA%Dandlang= enandformat=html).

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among others; Chatterji et al., ; MSCI ESG Research, ). Next, socially responsible investment raters combine these data into a score for each firm on the relevant CSR dimensions (e.g. environment, customers) using the rater’s unique approach. For example, MSCI rates the environmental, social (i.e. community, human rights, employee relations, diversity, and product attributes), and governance performance of firms based upon its own ratings model (MSCI ESG Research, ). This process produces a list of companies that comprises the rater’s index of socially responsible companies. There are several opportunities during this process when systematic error or other sources of bias can influence the ratings of firms even as early as the very first stage. Thus, composite measures of CSR that aggregate performance across different dimensions are susceptible to this bias. Therefore, comparisons across indices do not always line up. For example, Chatterji et al., () compared the indexes of six socially responsible investment raters during three separate years. They compared the indexes on the degree of overlap of firms that made it into the indexes and on the rank ordering of the firms within the indexes, controlling for the universe of companies from which the indexes were derived. They reported a range from  to  percent average firm overlap between socially responsible investment raters. They reported pairwise tetrachoric correlations between two raters ranging from . to .. These results suggest high variability in the degree of convergence among socially responsible investment raters, with instances of low convergence. However, research supports the construct validity of some of the individual dimensions (e.g. environment, diversity, governance) of the KLD index. For example, Kang () showed that part of the KLD diversity dimension (e.g. C-suite diversity and board of directors’ diversity) relates to past and future diversity performance. He also showed that part of the governance dimension (e.g. top management team compensation and reporting transparency) relates to company performance. Chatterji et al. () studied the environmental dimension of the KLD index and reported that the KLD environmental concerns score relates to past and future environmental performance (e.g. pollution or violations).

Theoretical rationale Most scholarly research on CSR and CSiR seeks to achieve a better understanding of its antecedents and consequences. Typically, this research is grounded in some type of theoretical rationale that specifies the nature of the relationships, their magnitude, and explains why the relationships are proposed to exist. Although CSR, CSiR, or their dimensions (e.g. employees, consumers, environment) may be driven by similar antecedent factors (e.g. Christensen et al., ; Kim and Lyon, ; Windsor, ), this is not necessarily the case. It is conceivable that there are antecedents that are unique to CSR or CSiR (or their dimensions) or that the antecedents function in different ways (e.g. Muller and Kräussl, ; Ormiston and Wong, ; Surroca et al., ). Recall that CSR and CSiR have even been positioned as antecedents and consequences of one another (e.g. Kotchen and Moon; Muller and Kräussl, ).

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The consequences of CSR and CSiR also are likely to operate differently. That is, although they both might affect reputation, they do so in different ways (e.g. McMahon, ; Muller and Kräussl, ; Surroca et al., ). Furthermore, there is a sizeable literature on whether and how CSR or CSiR impact a firm’s bottom line (Griffin and Mahon, ; Kang et al., ; Orlitzky et al., ; Price and Sun, ; Surroca et al., ; Waddock and Graves, ). The results are mixed for CSR. However, there is some convergence that CSiR has a negative financial impact on organizations (e.g. Kang et al., ; Price and Sun, ). Thus, research that seeks to explicate these relationships can be potentially disadvantaged if CSR or CSiR is operationalized with a composite that sums or otherwise aggregates the different dimensions into a single index (Carroll et al., ; Entine, ; Rowley and Berman, ; Wood, ). When CSR or CSiR dimensions are summed, it is assumed that the dimensions themselves are highly correlated (Graafland et al., ; Mattingly and Berman, ). However, a theoretical rationale for expecting these correlations is rarely provided (Carroll et al, ; Mattingly and Berman, ; Rowley and Berman, ; Wood, ), and research has shown them to be only minimally correlated (Mattingly and Berman, ; Sharfman, ). Furthermore, most composite measures equally weight the CSR or CSiR dimensions. However, research suggests that the dimensions should receive different weights. Experts have given the largest weight to employee relations, product characteristics, and community relations (Waddock and Graves, ).

Context The environment in which firms operate plays a potentially important role in understanding their CSR or CSiR, the intention behind that behavior, and the interrelationships among the CSR/CSiR dimensions (Carroll et al., ; Entine, ; Graafland et al., ; Griffin and Mahon, ; Kotchen and Moon, ; Waddock and Graves, ; Wood, ). One important part of the context that receives attention in this research is industry and sector. Industries develop different norms with respect to the treatment of stakeholders and face different pressures and expectations from stakeholder groups, not to mention different regulatory environments, all of which guide their choices and behaviors. For example, Keig et al., () found a positive relationship between a firm’s CSiR and environments that were characterized as corrupt. Waddock and Graves () reported that CSR differed by industry, with refining, rubber, and plastic scoring the lowest, and banks and financial services the highest. Thus, researchers should exercise caution when aggregating CSR or CSiR dimensions into a composite since the interrelationship among the dimensions (if they are even related) can be dependent on the industry or sector. At the very least, researchers should control for industry in any analyses using composite measures (e.g. Griffin and Mahon, ; Waddock and Graves, ).

Benchmarks Although several concerns have been raised about the use of composite measures of CSR for academic research purposes, there is some support for their use when the goal

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simply is to benchmark firms with respect to their CSR or CSiR. First, benchmarks can be easy for stakeholder to use since they allow for comparisons across firms and across time (Graafland et al., ). Second, benchmarks provide a degree of transparency as to how organizations treat their stakeholders. Consumer groups, especially, are interested in tracking the performance of firms even from one year to the next. Research has shown that firms that demonstrate positive progress on reducing their environmental footprint combined with greater transparency in the reporting of their achievements secure greater reputational gains than firms that demonstrate positive progress in their achievements but are less transparent in the reporting of the achievements (Philippe and Durand, ). Third, benchmarks enable organizations to track their own performance over time and across a broad spectrum of dimensions. Thus, they can identify the areas in which they meet, exceed, or fall short of their goals and how they compare to other organizations.

Perceptual Measures Managerial perceptions A third approach to measuring a firm’s CSR is via perceptual measures. This entails asking managers (or senior executives) to rate the firm on the different dimensions of CSR. The idea here is to gather input from those individuals in the firm who work at a level where they should have sufficient knowledge to rate the firm on its goals, activities, and procedures with respect to different aspects of CSR. While this approach is not a measure of objective CSR behavior, it is used to gage firm-level CSR. Maignan and Ferrell () provide a relatively recent example of this approach. They studied corporate citizenship towards customers, employees, and public stakeholders in line with Carroll’s () conceptualization of CSR. They created an eighteen-item measure that tapped manager’s perceptions of the degree to which the firm fulfilled economic (e.g. we have been successful at maximizing our profits), legal (e.g. the managers of this organization try to comply with the law), ethical (e.g. our business has a comprehensive code of conduct), and discretionary responsibilities (e.g. our business gives adequate contributions to charities; a program is in place to reduce the amount of energy and materials wasted in our business). They found support for the construct validity of their instrument in samples of senior marketing managers in the United States and France.

Employee perceptions The perceptions of employees (instead of managers) of a firm’s CSR have also been assessed using instruments similar to the one developed by Maignan and Ferrell (). Typically, research that relies on employee perceptions of CSR is motivated less by the need to use this measure as a proxy for the level of a firm’s CSR (as with managerial or executives’ ratings) and more by an interest in understanding the attitudinal and behavioral reactions of employees to their firm’s CSR. Turker () measured employee perceptions of CSR towards four stakeholder groups. Her

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definition of CSR incorporated behavior that has a positive impact on stakeholders and that goes beyond the economic interest of the corporation. Thus, unlike the measure by Maignan and Ferrell (), her measure did not include economic stakeholders. The four groups included social and non-social stakeholders (e.g. our company implements special programs to minimize its negative impact on the natural environment), employees (e.g. our company implements flexible policies to provide a good work and life balance for its employees), customers (e.g. our company provides full and accurate information about its products to its customers), and the government (e.g. our company always pays its taxes on a regular and continuing basis). More recently, El Akremi et al. () developed a thirty-five-item measure of employee perceptions of their organization’s CSR. This measure assesses actions and behaviors towards six stakeholder groups (i.e. community, natural environment, employees, suppliers, customers, and shareholders). Their definition considers the welfare of all stakeholder groups not just social stakeholders per se. Their measure separates community and environmental stakeholders into separate dimensions, adds back the economic perspective via shareholders, and includes supplier-oriented stakeholders. They validated this measure on several independent samples. As already noted, researchers are often interested in the outcomes of employee perceptions of their firm’s CSR. Organizational commitment is one of these outcomes. For example, in a study of business professionals, Turker () found that employees who perceived their firms to engage in CSR scored higher on affective organizational commitment (i.e. emotional attachment to the organization). Using an adapted version of Turker’s () CSR measure Farooq et al. () demonstrated that organizational trust and organizational identification mediated the CSR–organizational commitment relationship. Farooq et al. () distilled the mechanisms that explained the link between CSR perceptions and organizational identification. They showed that CSR directed towards external stakeholders relates to employees’ perceptions of organizational prestige, whereas CSR directed towards employees relates to their perceptions of the respect from the organization. They found that these perceptions in turn relate to different forms of organizational citizenship behavior. That is, perceptions of organizational prestige relate to organizational citizenship behavior directed towards the organization and perceptions of respect relate to organizational citizenship behavior directed towards others (i.e. helping) or that involve the self (i.e. personal industry). El Akremi et al. () found that employee perceptions of CSR relate positively to organizational identification and job satisfaction through their relationship with organizational pride. In a different sample, they showed that employee perceptions of CSR relate positively to affective organizational commitment through their relationship to perceived organizational support. This research supports positive employee outcomes that are associated with CSR perceptions. The perceptual measures of CSR described above are designed to focus on the responsible actions, behaviors, or intent of organizations. High scores imply that the organization has engaged in (or endeavours to engage in) responsible behaviors at least as perceived by managers or employees, whereas low scores imply that the organization

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has done so less. These measures do not directly speak to the CSiR behaviors of organizations, since a low score is not necessarily a sign of CSiR. For example, an employee may respond that he or she strongly disagrees with the following statements: “our company invests in humanitarian projects,” “our company takes actions to reduce pollution related to its activities,” “our company ensures that communication with shareholders is transparent and accurate” (El Akremi et al., , –). However, this response does not necessarily suggest that the company supports non-humanitarian activities, actively pollutes, or intentionally hides or misrepresents information to shareholders. Furthermore, as noted earlier, research has shown that organizations can and do engage in both CSR and CSiR (e.g. Kang et al., ). How is this contradictory information perceived and processed by managers and employees, and how is it reflected in these perceptual measures? Future research might aim to design instruments that focus on manager or employee perceptions of their organization’s CSiR actions, behaviors, or intentions.

A  C S I

.................................................................................................................................. Individuals function within systems, which can be both enablers of CSR and CSiR or deterrents. Scholars have called for the need to consider the role that these factors play in understanding and explaining positive and negative corporate social behavior and for more research on these relationships (Christensen et al., ; Delmas and Burbano, ; Greve et al., ; Steinmeier, ; Windsor, ; Wood, ).

Pressure Pressure, or lack of pressure, has been proposed as an antecedent of fraud, greenwashing, and CSiR (e.g. Surroca et al., ; Testa et al., ). Pressure can come in many forms and from different people or institutions. It is not known whether all types of pressure affect decisions in the same way. Scholars have studied how pressure from different stakeholder groups in relation to CSR initiatives influences the adoption of environmental practices. This research considers different degrees of adoption, namely superficial or symbolic adoption at one end, versus substantial adoption or the internalization of environmental practices at the other end (Testa et al., ). Evidence suggests that pressure from customers or industry groups relates to superficial or symbolic adoption, whereas pressure from shareholders, banks, financial institutions, or suppliers relates to substantial adoption or “corporate greening.” Similarly, other researchers have found that stakeholder pressure directed at headquarters relates to decisions to relocate operations to countries where stakeholder pressure is lower or where laws are less stringent (Strike et al., ; Surroca et al., ).

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Mishina et al. () show that pressure from the organization itself can be associated with CSiR. They demonstrated that firms that achieve performance above social expectations are more likely to engage subsequently in illegal behaviors. The authors reason that the pressure organizations face to surpass their own performance achievements might explain their subsequent illegality. Thus, it appears that the source of the pressure does matter, and it can facilitate or deter CSR progress and even facilitate CSiR. One form of pressure is time pressure. Organizations are under constant pressure to move quickly in response to increased competition, especially in industries where innovation is critical. Research shows that time pressure impacts performance (including negative behaviors). Morales-Raya and Bansal () studied organizational speed in two beverage producers over a ten-year period. They consider the frequency of activity related to CEO tenure, mergers and acquisitions, strategic alliances, and shares traded in their assessment of organizational speed. Their outcome is the number of CSiR events (e.g. product recall, pollution) directed at various stakeholder groups (i.e. shareholders, consumers, environment, and society). Their findings show a greater number of organizational mishaps in the beverage producer that scored higher on organization speed. Furthermore, in a study of CSR managers, Steinmeier () reported that they experience intense pressure to improve in the various CSR rankings and face what can be unrealistic performance expectations, which can give rise to CSiR. Lastly, much has been written about the  Deepwater Horizon oil spill in the Gulf of Mexico. In a Federal ruling, BP was found to be primarily responsible (although not solely responsible) for the disaster. Interpretations of the ruling make note of the role that the decision to continue drilling in an effort to save time and money played in the disaster despite evidence from testing that suggested the drilling should stop (Robertson and Krauss, ).

Incentive Systems The design of incentive systems can encourage the type of risky decision-making that if left unmanaged can result in unethical behavior. One of the high-profile cases that showed the potential negative impact is Enron, where the practices are believed to have contributed to a culture that rewarded risky behavior and a focus on the short term (e.g. Beenen and Pinto, ; Greve et al., ; Spector, ; Windsor, ). The “rankand-yank” performance review system, heavy reliance on stock options, and potential for large bonuses put pressure on individuals to close deals even if those deals later created little or no value to the company. The company was able to mask the downside of deals gone wrong due to the low transparency that permeated Enron more generally and to the low transparency that was afforded by some of these practices (Spector, ). In a study of CEO pay structure and CSR, Deckop et al. () found that a structure that rewards short-term performance relates to less CSR compared to a structure that focuses on long-term performance.

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Organizational Climate Climate is the perceptions that individuals develop from their cumulative experiences at work. Individuals’ interactions with policies, practices, procedures, and the work context more broadly are believed to comprise climate perceptions (Schneider and Reichers, ). The experiences of each employee are referred to as psychological climate where the aggregated composite of the experiences and perceptions of several individuals at work comprises the organizational climate. Climate has been shown to impact work outcomes at the individual, group, and organization level of analysis (for reviews see Kuenzi and Schminke, ; Martin and Cullen, ).

Ethical climate Aspects of the work context that are of an ethical or moral nature shape what has been referred to as ethical work climate (Victor and Cullen, ). Research shows that the perceptions that employees have of the organization’s CSR initiatives relate to their perceptions of ethical climate (Duane Hansen et al., ). Victor and Cullen () derived nine dimensions of ethical climate. Five emerge more often in studies of ethical climate in organizational contexts (Martin and Cullen, ): instrumental, caring, independence, rules, and law and code. Instrumental climates are believed to motivate decision-making that serves the interests of the organization (or individual), whereas caring climates emphasize decision-making that takes into consideration its impact on others (including society). Independent work climates emphasize the role of individuals’ idiosyncratic moral principles and beliefs rather than those of other individuals or institutions. Rules climates put emphasis on organizational codes of conduct, whereas law/code climates defer to the rule of law (or external codes of conduct). Meta-analytic research indicates that each ethical climate type relates to less dysfunctional behavior except the instrumental climate, which relates to more dysfunctional behavior (Martin and Cullen, ). A different meta-analysis also showed that climates that focus on protecting self-interest relate to unethical behavior, whereas climates that focus on following rules and procedures or that focus on concern for the public/ customers relate to less unethical behavior (Kish-Gephart et al., ). Recent research has focused on understanding some of the mechanisms that explain how climate works, as well as the conditions that moderate how it works. A study of corporate accountants showed that most ethical climate types have a positive relationship with the importance organizations attach to ethics/social responsibility except for the instrumental climate, which has a negative relationship (Shafer, ). The importance accountants place on corporate ethics/social responsibility in turn relates to their judgments of various ethical actions. Another study found support for the role that moral emotion (e.g. empathy or feelings of sympathy and compassion) plays in explaining the relationship between ethical climate types and ethical behavior. Researchers showed that both the other-focused ethical climate and a self-focused ethical climate relate to higher ratings of ethical behavior as provided by a supervisor

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when individuals also report high collective empathy and high ethical efficacy (Arnaud and Schminke, ). When only bivariate correlations are considered, a self-focused ethical climate has a negative relationship with ethical behavior, whereas the otherfocused ethical climate has a positive relationship with ethical behavior. Other scholars found support for the interaction between service and ethical climates. They showed that a strong service climate (i.e. employee perceptions of the importance of and support provided for delivering superior customer service) has a more favorable relationship with business outcomes when ethical climate (i.e. employee perceptions of organization’s ethical treatment of customers) is also strong (or unethical behavior is low; Jiang et al., ). As such, researchers have called for the need to study more specifically how climate relates to CSR (Morgeson et al., ). Other scholars theorize that ethical climate can play a positive role in various efforts at CSR whereas an unethical climate is proposed to explain CSiR behavior such as greenwashing (e.g. Delmas and Burbano, ; Windsor, ). Researchers even call for a separate construct labeled pro-environmental organizational climate, which would capture employees’ perceptions of the sustainability-related practices of their organization (Norton et al., ), with the aim of explaining the antecedents of genuine green behaviors on the part of employees.

Diversity climate Other types of climates focus less on ethics or sustainability and more on other stakeholders. A diversity climate refers to shared perceptions that employees have with respect to the organizations’ practices surrounding tolerance for racial, gender, LGBT, age, and ethnic diversity. Research shows that a strong diversity climate has been associated with increased loyalty (Chung et al., ), work group performance (i.e. military context; Boehm et al., ), retail sales growth (McKay et al., ), customer satisfaction (McKay et al., ), and lower turnover intentions (Kaplan et al., ). Research has also shown some of the individual and organizational costs that follow from an antithesis of diversity, such as discrimination (e.g. Beauchamp, ; Settles et al., ), sexual harassment (e.g. McDonald, ; O’Leary-Kelly et al., ), and various forms of fraud or white-collar crime (e.g. Simpson, ).

Organizational Culture and Leadership Organizational culture Organizational culture refers to the set of assumptions and values that guide the behaviors and decisions of its members. Once values are encoded, they are said to be disseminated through rituals, artifacts, symbols, and stories of leaders as a way to emphasize what is important and how to do what needs to be done (Giorgi et al., ; Greve et al., ). Norms are then established for what constitutes appropriate conduct. Although climate and culture are distinct, some scholars suggest that they

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represent “the higher-order social-psychological fabric of the organization” (Schneider et al., , ). Different organizational culture types have been shown to relate positively to employee attitudes and operational or financial effectiveness (e.g. Hartnell et al., ). In their review of organizational misconduct, Greve et al. () explain that organizational cultures can endorse, permit, or facilitate certain forms of misconduct while at the same time condemning others. This perspective lends support to arguments (and research findings) that organizations can engage in one form of CSR while simultaneously engaging in another form of CSiR. In research using the Sustainalytics social ratings, Surroca et al. () showed that organizational culture is one intangible resource (of the four they studied) that mediates the relationship between CSR and firm performance. They reported that the mediation works in the opposite direction as well (i.e. financial performance to CSR through organizational culture). Thus, research may want to consider the extent to which organizations value sustainability, ethics, equality, or other social responsibilities; the extent to which these values are embedded within the organization’s norms; and the extent to which they are, in fact, practiced (e.g. Aguinis and Glavas, ; Ones and Dilchert, ).

Leadership Leaders are the most important figures for shaping the culture of the organization through their day-to-day behaviors including communication (Greve et al., ). They set the tone for whether the espoused values of the organization are consistent with the enacted values. Commitment to values that support CSR and endorsement of these values matters (Bansal, ; Ones and Dilchert, ; Robertson and Barling, ) and can help employees make sense of competing demands that pit profits against social goals. Research shows that managers’ commitment to CSR values relates to the positive discretionary behaviors of employees, which relate to firm performance (de Luque et al., ). Research has also shown that the pro-environmental behaviors of leaders relate to employees’ passion for the environment and their own behaviors in support of the environment (Robertson and Barling, ). As noted earlier, some leaders create positions such as CSR/sustainability managers/executives to facilitate CSR initiatives including the mitigation of CSiR. For example, Volkswagen hired an anticorruption executive to its top management team following its emissions test scandal (Schreiber, ). Furthermore, research has shown some support for the positive influence that sustainability managers can have on the firm’s environmental performance when their boards also have environmental committees (Dixon-Fowler et al., ). Organizational leaders do not always practice what they preach or what they claim in their vision and values statements. One of Enron’s organizational values was integrity. However, leaders oftentimes failed to model this value (Beenen and Pinto, ; Spector, ). The alignment of rhetoric to action can fail: top management’s espoused commitment to CSR does not always match what is implemented (e.g. Aguinis and Glavas, ; Delmas and Burbano, ; Martin et al., ; Windsor, ), which has been referred to as decoupling. Decoupling occurs when there is a gap

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between an organization’s commitment to do something and the actual implementation of that commitment (e.g. Crilly et al., ). A company may exaggerate, couple rhetoric and action, or remain silent on its commitment (Kim and Lyon, ). For example, the demand for a reduction in carbon footprints and for healthier products and services does not always coincide with shareholders’ focus on net present value creation. These competing demands drive some firms to decouple CSR rhetoric from action or to misrepresent sustainability information. Research shows that when firms report on their sustainability initiatives, the communication pattern of firms that engage in decoupling has different linguistic properties compared to firms that do not decouple (Crilly et al., ). Other scholars have shown that some firms underreport environmental achievements rather than overreport, which has been labelled brownwashing (Kim and Lyon, ). These scholars reason that this behavior is a potential response to the fear of a drop in share price that has been associated with investments in environmental initiatives. They note that brownwashing can occur for social (e.g. charitable donations, employee benefits spending) and governance (e.g. diversity of board members) forms of CSR and not just sustainability initiatives.

Coordinated culture and leadership Scholars theorize about the strategies used and the coordination needed across organizational levels including top management for rule breaking, corruption, or other forms of CSiR to materialize (e.g. Aven, ; Christensen et al., ; Martin et al., ; Pearce and Manz, ; Pinto et al., ). Greve et al. () propose four stages by which organizational misconduct diffuses throughout the organization. The first stage is the initiation of the action followed by the proliferation to lower level employees. The third stage occurs when the misconduct is institutionalized in the structures and routines of the organization, after which point new members become socialized on the practices. Other research considers the mechanisms that explain the normalization of deviant practices beyond the organization via their spread to other organizations (e.g. Earle et al., ).

Governance Boards of directors have great influence over organizational activities and play an important role in deciding on the degree to which an organization will invest resources in CSR. Researchers have studied the relationship between board characteristics and CSR or CSiR. Findings show a positive relationship for the independence of the board of directors, board size, or board diversity (i.e. nationality and gender diversity) and more favorable CSR outcomes or less fraud (Barka and Dardour, ; Cha and Abebe, ; Cumming et al., ; de Villiers et al., ; Jizi et al., ; Zhang et al., ). More specifically, de Villiers et al. () analyzed the environmental performance of a sample of , firms in the KLD database for the years  and . They found a positive relationship between environmental strengths and the independence of the

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board of directors and the number of directors. Jizi et al. () also reported a positive relationship between board independence, board size, and CSR in a sample of  US banks from  to . They operationalized CSR as the quantity and quality of information disclosed in the annual report. In a conceptual paper on leadership centrality, Pearce and Manz () propose that centralized leadership can motivate CSiR when paired with a high need for personal power. High leadership centrality occurs when the chair of the board of directors is the CEO himself or herself and several board interlocks exist (i.e. members of senior leadership teams serve on each other’s boards). In contrast, shared leadership and a high need for social power (i.e. use power to help develop others) are less likely to motivate CSiR. There has been some support for the diversity of board members and CSR. Barka and Dardour () analyzed a sample of twenty French companies that voluntarily participated in the Carbon Disclosure Project. They report a positive relationship between a firm’s carbon disclosure score and both board size and board nationality (i.e. percentage of foreign directors). Zhang et al. () found similar support for the independence of board members, board member diversity, and CSR performance (measured using Fortune magazine’s reputational CSR scores). They analyzed  companies on the US stock exchange and operationalized diversity as the proportion of female board of directors. In contrast, Cha and Abebe () in their analysis of  US firms from  to  found no relationship between the independence of board members and a firm’s charitable donations. However, their study did find support for a positive relationship between the proportion of female board members and the firm’s charitable donations. Lastly, Cumming et al. () considered securities fraud in a sample of , firms from the China Securities Regulatory Commission. Half of these firms served as a control group, while the other half had some reference to an enforcement action. They found a negative relationship between the proportion of female board chairs (or the proportion of female directors) and fraud. Research has shown some support for the role that environmental experience among board members plays in achieving CSR progress. In an analysis of  US firms drawn from the KLD database for  to , Walls and Hoffman () report that firms whose board members had accumulated more environmental experience achieved environmental strengths scores that were above the industry average. Dixon-Fowler et al. () found that organizations in which boards establish specialized committees to oversee environmental strategies reported stronger environmental performance. They also reported that this effect is stronger for firms employing a sustainability manager. Their analysis was based on a sample of  firms from the S&P  for . In contrast, Rivera () reported mixed support for the role of environmental expertise in a study of hotels in Costa Rica. He reported no relationship between whether the CEOs majored in environmental management in college and the hotel’s choice to participate in a sustainability certification program. However, he did find a positive relationship for the hotels score in the certification program. Furthermore, the hotels of CEOs with graduate education were more likely to participate in the program and scored higher in the program than hotels whose leaders did not hold a graduate

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degree. The results from this preliminary set of studies suggests that board composition and expertise matters for CSR and CSiR.

Regulation Unethical firm behavior, greenwashing, and CSiR more generally have led to calls for further regulation in an attempt to standardize reporting guidelines. There are advocates for more regulation as well as opponents, yielding a rich debate around whether or not regulation is a solution or even part of the solution to advancing CSR or minimizing CSiR. Regulation has been viewed as a form of pressure that should motivate organizations to take important steps towards ethical behavior or toward meaningful progress on environmental initiatives. However, regulation can be poorly designed, resulting in resistance and diminished effectiveness (e.g. Armstrong and Green, ; Cottino, ; Rupp and Williams, ). The context in which it is adopted can also impede its effectiveness (Delmas and Montes-Sancho, ). Furthermore, it has been argued that regulation has done little in the past to eliminate other forms of wrongdoing (e.g. Armstrong and Green, ; Cottino, ) or to spur CSR initiatives (e.g. Testa et al., ). More recently, some have argued that the Sarbanes Oxley Act of  has not had the intended effect of mitigating organizational wrongdoing (e.g. Harte, ). It has also been argued that deregulated environments are ripe for organizational wrongdoing (e.g. Allcorn and Stein, ; Ashforth et al., ) and that voluntary CSR efforts can be met with resistance (Rivera, ) depending on the source of pressure (Delmas and Toffel, ) and can secure limited beneficial outcomes absent sanctions (e.g. Delmas and Montes-Sancho, ). In contrast, Rupp and Williams () propose that voluntary initiatives (e.g. soft law) have the potential to achieve more than mere compliance with regulation (e.g. hard law) since they are internally motivated. They propose and demonstrate through a case study that soft law can encourage the internalization of values and a deeper commitment to CSR initiatives. That is, soft law has the potential to change the culture of the organization through influencing norms and industry-standards regarding CSR. Although the debate typically focuses on whether or not to regulate, perhaps the debate should also consider a combination of regulation and voluntary initiatives that is informed by the context.

W D W G F H?

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Research Implications Corporate social irresponsibility has generated scholarly interest especially in establishing it as distinct from CSR rather than as the opposite end of the same continuum. As noted earlier, research has shown that CSR and CSiR are antecedents and consequences

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of one another (e.g. Kang et al., ; Kotchen and Moon, ; Ormiston and Wong, ; Price and Sun, ). Future research can devote more attention to theorizing about those antecedents that are unique to CSR and those that are unique to CSiR versus those factors that may serve as antecedents to both. Another avenue for research is to study the path from CSR or CSiR to important stakeholder outcomes. For example, the work of Surroca et al. () shows that CSR is related to important outcomes through its influence on intangible resources (e.g. innovation, reputation, human capital, and organizational culture). Scholars have begun to study these various paths, yet more work is needed. One of the more challenging questions is to devise a theory and to conduct research that delineates how organizations can motivate CSR or fulfill their CSR intentions while also minimizing CSiR. It is one thing to compensate for CSiR by engaging in CSR, it is another to fulfill social responsibilities to different stakeholders (including shareholders) while containing CSiR. Relatively less attention has been given to this research question. Nevertheless, this chapter reviewed research showing the independent and important roles that organizational culture, leadership, incentives, climate, governance, and regulation can play in motivating CSiR instead of CSR and/or the reverse. Future research may also consider models for specific dimensions of CSR/CSiR in industries that are susceptible to CSiR, or in industries that face strong pressure to act quickly. Delmas and Burbano () provide an example of one for greenwashing. Regardless of the direction future research takes, a challenge that persists in this area of inquiry is the measurement of CSR and CSiR. First, much of the reviewed research employed aggregate measures of CSR or CSiR provided by public indices compiled by socially responsible investment raters. However, these measures are not always the most appropriate ones for research if the hypothesized relationships are most applicable to specific dimensions (e.g. environment) of CSR/CSiR and do not generalize across all dimensions. As noted earlier, firms do not necessarily perform at the same level on each of the environmental, social (e.g. community, employee relations, product), and governance dimensions of CSR or CSiR, especially within certain industries where they may face different risks or pressures. Furthermore, the mechanisms that explain how different antecedents exert their influence on CSR or CSiR outcomes may differ for environmental versus governance versus social forms of CSR or CSiR and/or by industry. Thus, when relevant the measure of CSR or CSiR should be taken at the level of the specific dimension (e.g. environment, employee relations, product) or industry (or both) rather than represented by a measure that aggregates the firm’s performance across all CSR dimensions (e.g. environment, social, governance) since it is possible that aggregation masks important relationships. Second, several of the antecedent factors discussed in this chapter exert their influence over a longer term horizon, necessitating data over multiple years in order to provide an adequate test of the relationships and one that permits causal inferences. Nevertheless, these data can be difficult to obtain especially for certain antecedents. Third, perceptual measures are available and used in research (i.e. manager and executive level perceptions or employee level perceptions). These measures can be useful for studying employee

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reactions to firms’ CSR (i.e. CSR as perceived by employees themselves). However, typically these measures focus on CSR rather than on CSiR. It might be useful to extend this work to consider employee reactions to CSiR or to evidence of both, since some organizations do engage in CSR and CSiR. Thus, the measurement and data requirements are demanding if the goal is to move the research forward in a manner that addresses the limitations of prior work and that advances our understanding of how firms can realize CSR and contain CSiR.

Practical Implications Leaders play a fundamental role in advancing CSR goals while mitigating CSiR. They can shape the organizational culture, infuse the organization with an ethical and diverse climate, and design incentive systems to encourage a responsibility mindset (Pless et al., ; Porter and Kramer, ). However, the workplace can be designed to achieve the opposite. Unrealistic performance expectations, a pressure-cooker culture, discrimination, harassment, stress, and perceptions of injustice are some of the factors that have been associated with low performance, counterproductive work behavior, unethical behavior, low well-being, high absenteeism, high turnover, and other forms of withdrawal, which in turn can cost organizations (Beauchamp, ; Greve et al., ; O’Leary-Kelly et al., ; Simpson, ; Spector, ; Steinmeier, ). However, this is an opportune time for leaders to affect positive change and to partner with institutions and stakeholders in their efforts. Social Accountability International established the SA® Certification Standard in an effort to help organizations strengthen their commitment to social performance. Further, the United Nations Global Compact offers principles and guidelines to support organizations in the alignment of strategy and systems to achieve their CSR goals. Investments in skills training and leadership development can facilitate CSR progress (Porter and Kramer, ). Reviews of the research on training and development support the potential for benefits to individuals, teams, and organizations through improved performance, profit growth, better service, and other outcomes (Aguinis and Kraiger, ; Kim and Ployhart, ; Van Iddekinge et al., ). However, this potential is not always realized. Future research needs to focus on how to optimize the transfer of training initiatives (Baldwin et al., ). Likewise, leadership development programs are in high demand, and research suggests that they can be effective (e.g. Blume et al., ; Collins and Holton, ; Lacerenza et al., ). However, the organizational context does not always support leadership development initiatives, thereby limiting the value added of the training (e.g. Beer et al., ). Finally, educational institutions can play a role in directing the public and scientific discourse around how to motivate CSR while containing CSiR (Hoffman, ). Through this discourse they can sensitize students to the opportunities afforded by innovative solutions that build CSR thinking into strategy and systems, new approaches

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to creating shared value, and the organizational design factors that steer leaders, managers, and employees towards CSiR (e.g. Ashforth et al., ; Christensen et al., ; Porter and Kramer, ; Stewart, ). There is some evidence that educational institutions are already incorporating CSR in the curriculum (e.g. Christensen et al., ). Furthermore, the United Nations demonstrated its support to embedding sustainable values in the management education of future leaders by establishing the Principles in Responsible Management Education in  (PRME; ). This voluntary initiative is based on six principles that aim to develop the skills of future leaders. Some  educational institutions worldwide have joined PRME as of the writing of this chapter. Nevertheless, the effectiveness of CSR education will depend in part on the pedagogy of the CSR curriculum. There is a lot to learn from the long history of ethics training in educational institutions. The vast literature on ethics training programs indicates considerable variation in their quality and effectiveness (e.g. Trevino, ; Trevino and McCabe, ; Weaver et al., ). This literature suggests that programs based in moral development theory typically see improvement in participants’ moral reasoning. However, it also suggests that individuals who participate in these programs demonstrate improvement in moral reasoning with hypothetical dilemmas, but that these outcomes do not necessarily transfer to real-life scenarios (e.g. Trevino, ; Trevino and McCabe, ). Furthermore, recent research has drawn attention to the role that moral intuition plays in moral behavior. In contrast to the deliberative, multilevel, and multistage approach of moral reasoning, moral intuition suggests that our responses to moral situations can be automatic, nondeliberative, and emotionally driven (Weaver, et al., ). Scholars are exploring whether to incorporate moral intuition in ethics education programs. Other design factors to consider from experience with ethics education are: to educate students about risk factors embedded in the business context that might steer them toward unethical behavior, mix in-class experience with real-life practice, and integrate education throughout the program of study rather than offer a one-off course (e.g. Trevino, ; Trevino and McCabe, ).

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.................................................................................................................................. Corporate social responsibility continues to motivate organizations to adopt more responsible business practices. This motivation is driven in part by pressure from different stakeholders. Nevertheless, the context in organizations is ripe for risky behavior giving rise to CSiR instead of CSR or to both. Thus, leaders continue to face the challenge of how to motivate strong but ethical performance while preserving the environment and natural resources for future generations. The research community has made important contributions to our understanding of CSR and CSiR. Nevertheless, there remain numerous research questions to study.

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  ......................................................................................................................

   Understanding Stakeholders’ Negative Responses to Corporate Social Responsibility ......................................................................................................................

 . 

I

.................................................................................................................................. T is now a well-established literature showing that stakeholders often respond positively to companies’ environmentally and socially responsible practices, or corporate social responsibility (CSR). However, much less attention has been dedicated to determining whether and why people might also respond negatively to CSR, and the circumstances in which this is more likely to occur. This is a timely question because the landscape of CSR is shifting rapidly. For example, “greenwashing” (i.e. misleading or even false claims about a company’s environmental practices or the “green” benefits of their products) is rampant, and not only a behavior of for-profit companies— scholars have cited evidence that governments, research organizations, universities, policy experts, and even NGOs engage in greenwashing (Lyon and Montgomery, ). As I later assert, this has likely resulted in a context where people’s responses to CSR claims are becoming increasingly skeptical—and even cynical—regardless of the company’s actual performance on CSR dimensions. In other words, even well-meaning and genuine CSR actions and communications may be met with suspicion because widespread misrepresentation has created a justifiably wary public. Research should now consider a broader range of perceptions, responses, and reactions to CSR—or the “psychology of corporate social responsibility” (Rupp et al.; see also Jones, Chapter , this volume). This is an issue of growing and critical importance for CSR researchers and practitioners who seek to encourage companies’ authentic environmentally and socially responsible practices, and for organizational decision-makers who must justify continued investments in CSR. Nearly all published research to date that examines people’s attributions and skeptical or cynical reactions to CSR has been conducted in a consumer behavior context

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 . 

(e.g. Forehand and Grier, ; Hammad et al., ; Joireman et al., ; Mohr et al., ; Newman et al., ; Kim and Lee, ; Skard and Thorbjornsen, ; White and Willness, ). To date, we know very little about when and why other—critically important and meaningfully different—organizational stakeholders, such as job seekers and employees, might respond negatively to CSR. Moreover, despite pervasive skepticism about CSR practices among the general public (DuFault and Kho, ), absent in the current published literature is a clear understanding, definition, and measurement of people’s negative reactions to CSR claims (Willness and Jones, ). This reflects a lack of research on the broader topic of suspicion in the social sciences (Bobko et al., ), and a need for measurement development work to assess CSR evaluations and reactions more generally (Gond et al., ). As will become evident in this chapter, there has also been much more research emphasis on how people react to companies’ environmental practices and related communications, relative to other dimensions of CSR like community involvement. In this chapter, I highlight research to date that suggests we should be concerned with the potential for stakeholders to respond negatively to CSR practices and communications, and I describe some recent conceptual work on delineating the construct space around negative reactions to CSR. I focus on “microlevel phenomena” (Morgeson et al., ), commensurate with the goal of expanding research on the psychology of CSR, as well as echoing ongoing calls to address the gap in the scholarly literature with respect to micro-level CSR research (Aguinis and Glavas, ; Jones et al., ). In particular, I focus on the need for research on potential negative reactions to CSR from employees and job seekers. There is much work that remains to be done in the organizational sciences regarding this emerging issue—from theory and measurement development to explicating the mechanisms that can explain when and why CSR may elicit unintended negative reactions from stakeholders—what I term “CSR backfire effects.” Thus, in the second half of the chapter, I offer some directions for future research and important questions that need to be explored.

S R: E  P  CSR

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Emphasis to Date on the Positive Effects of CSR Research to date has convincingly demonstrated that there can be positive outcomes for companies that are known for their CSR,¹ including financial benefits (e.g. Orlitzky et al., ), attracting talent (e.g. Jones et al., ), and enhanced employee attitudes ¹ For a fuller discussion and/or definition of the concept of corporate social responsibility, please see Jones and Rupp (), Morgeson et al. (), and Waldman et al. ().

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and behaviors (e.g. Glavas, ; Jones, ). Such positive outcomes are generally attributed to stakeholders responding favorably to CSR practices (Barnett, ), including consumers (e.g. Du et al., ; Becker-Olsen et al., ; Ellen et al., ), employees (e.g. Brammer et al., ; De Roeck and Delobbe, ; Jones, ; Tian and Robertson, ; Vlachos et al., ), and job seekers (e.g. Backhaus et al., ; Behrend et al., ; Greening and Turban, ; Gully et al., ; Jones et al., ; Rupp et al., ). For example, in Jones et al. (, study ) we asked career fair attendees to identify an organization that was among their most attractive employment options, and these job seekers reported greater attraction when they believed the organization was environmentally friendly or community-oriented. Thus, CSR practices made organizations especially attractive, even among a group of the most desirable employers at the career fair, which can create a competitive advantage by increasing the applicant pool and the chance of hiring a top performer (Breaugh, ; Ployhart, ).

Positive Responses to CSR are Only Part of the Story Despite a burgeoning CSR literature, few studies have examined “backfire effects” of CSR—that is, when an organization’s CSR practices elicit negative reactions from its stakeholders, rather than the intended or anticipated positive reactions. As already noted, the vast majority of studies on CSR (particularly at the micro level of analysis) have examined, tested, and highlighted positive stakeholder responses to CSR, which presumably in turn contributes positively to companies’ financial performance (Jones et al., ). Thus, the potential for creating shared value through CSR is well established (El Akremi et al., ). However, understanding people’s positive reactions to CSR is only part of the story. Moreover, the landscape of CSR has changed significantly since scholars began studying the phenomenon. Indeed, researchers have observed that people are exposed to an overwhelming number of green claims daily, making it difficult to separate fact from fiction (Manrai et al., ). In a study of over , products in Canada and the US, TerraChoice () found that the number of green products increased  percent in a single year; of those green product claims,  percent were found to reflect some degree of greenwashing. This is creating pervasive conditions of “green consumer confusion,” where people can no longer accurately interpret environmental claims about products or services (Chen and Chang, ). Organizations’ claims of pursuing the so-called “triple bottom line” (economic, social, environmental) may be met with stakeholder skepticism, especially given numerous motives that organizations have for professing such practices, like addressing public and media scrutiny and improving stakeholder trust (Aguinis, ), or competitive pressures and consumer demands (Delmas and Burbano, ). Public, media, and scholarly concerns with greenwashing have increased sharply in response to nearly ubiquitous claims from companies that their products and practices are green

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or environmentally friendly (Lyon and Montgomery, ). As a story in the New York Times (Gelles, ) proclaims: “these days, greenwashing is spreading like a weed,” and the Guardian (DuFault and Kho, ) notes, “as claims of greenwashing grow, we see a backlash of sentiment . . . among savvy, skeptical consumers.” Other (non-environmental) forms of CSR, such as community involvement and socially oriented initiatives, are subject to scrutiny as well. So-called “marketized philanthropy”—the consumption of products, media, and even celebrities promoting CSR—is criticized for allowing consumers to “have their cake and eat it too.” That is, it may be encouraging consumers to participate in capitalism, while sympathizing with those who might be disadvantaged by it (e.g. Nickel and Eikenberry, ). Nickel and Eikenberry cite examples of food products that ostensibly combine philanthropy or CSR with consumption, including KIND Fruit + Nut bars, Endangered Species chocolate, and Newman’s Own salad dressings. The Gap’s “Product RED” campaign, which directed a portion of the proceeds from clothing sales to a fund to help fight AIDS in Africa, is similarly criticized for ultimately harming Africa’s ability to become self-sufficient and for simply concealing profit motives in fashionable charity (Phu, ). Despite a minority voice from an analysis that concluded the RED campaign is genuine and does accomplish its CSR goals (Amazeen, ), the program faced widespread and severe criticism from skeptical public, scholarly, and media sources that is difficult to dispel (Frazier, ; Nickel and Eikenberry, ; Phu, ). Disingenuous or misleading CSR claims are not confined to product advertisements (textual or visual), but can also exist within an organization’s practices and structures. For instance, “decoupling” occurs when internal company practices are separated from the external image that is presented to the public (e.g. Crilly et al., )—such as when a firm promotes its creation of a Sustainability Department, but that department may have no real power or resources allocated to it (Lyon and Montgomery, ; Meyer and Rowan, ). This use of empty promises and policies—or so-called “cheap talk”—can be convincing to stakeholders whose interests are connected to those of the firm (e.g. investors, Lyon and Montgomery, , ), but recent research demonstrates that the deception is evident in the communication style and not all stakeholders are fooled (Crilly et al., ). Some researchers have concluded that “an outside stakeholder should look with a skeptical eye at any company that commits to a policy if that company does not have an economic motivation for implementing it” (emphasis added; Ramus and Montiel, , –). Other forms of disingenuous claims include selective disclosure, questionable certifications or labeling, misleading imagery or narratives, and co-opted NGO partnerships or endorsements (Lyon and Montgomery, ). Scholars have distinguished between embedded CSR practices (i.e. those that are tied to the company’s core mission and operations) and peripheral CSR practices (i.e. those that are not integrated or are even unrelated, such as disconnected philanthropy; Aguinis and Glavas, ; Jones and Rupp, ), as well as substantive versus symbolic CSR (David et al., ; Donia and Tetrault Sirsly, ).

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Thus, companies face a daunting new challenge: overcoming widespread cynicism and skepticism about CSR practices among stakeholders (TerraChoice, ) whose negative reactions may undermine a firm’s justification for continuing to invest in CSR. Just as positive outcomes of CSR can impact the company’s financial bottom line (e.g. Orlitzky et al., ), some studies have shown that disingenuous CSR practices like greenwashing can actually lead to negative organization-level outcomes, including detriments to financial performance (e.g. Walker and Wan, ; Wu and Shen, ). Worse still, negative reactions can occur even when a company is not engaging in greenwashing or misrepresentation per se (e.g. Jones et al., ). Unfortunately, corporate leaders will find little guidance from the scholarly literature because, despite burgeoning CSR research, few studies have documented the “backfire effects” of CSR. Surprisingly little is known about when and why people respond negatively to an organization’s CSR practices or communications (e.g. Maignan and Ferrell, ; Wanderley et al., ), despite considerable reason to suspect it occurs frequently.

Is there Evidence that Stakeholders React Negatively to CSR? You have to be authentic (when dealing with CSR) otherwise people become very skeptical about who you are and why you’re doing it, and that can be very damaging. (Mark Wakefield, Corporate Citizenship Manager for IBM UK: Musafer, )

As already noted, there is growing evidence that stakeholders are becoming more wary, and even skeptical, of companies’ environmental and social claims, and arguably with good reason given that it may now be more difficult for them to discern what is genuine as opposed to hyperbole, misrepresentation, or even deception. In terms of micro-level CSR research, which is the major focus of this chapter, marketing research is well ahead of organizational behavior (OB) and human resource management (HRM) in examining CSR backfire effects. Indeed, there is very little published research to date on negative responses to CSR among stakeholders like job seekers and employees, despite the importance of these stakeholder groups for organizational outcomes. In this section, I review some of the findings from consumer behavior (although it is not intended to be an exhaustive review), which is a more well-developed literature on this topic, and I then consider the studies to date on employees and job seekers. Table . provides a more comprehensive snapshot of the micro-level studies that have found (intentionally or incidentally) some form of negative response to CSR among these stakeholder groups. My goal is to highlight some important insights and principles that have been revealed in marketing research, and that may inform Organizational Behavior/Human Resource Management scholarship. But at the same time, I also emphasize that job seekers and employees are a different type of stakeholder than

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Table 9.1 Studies Reporting Negative Responses to CSR Article

General conclusion or inference from study findings

Consumers Alhouti et al. (2016)

Reparative CSR (trying to rectify a wrongdoing through a CSR act) can be viewed as inauthentic when consumers perceive it as ineffectual or simply done to “save face.”

Becker-Olsen et al. (2006)

Initiatives that are low in product-cause fit reduced consumers’ perceptions of the company’s credibility and position, as well as purchase intentions and overall attitude toward the company, regardless of the firm’s motivation for the CSR initiative (Study 1). Firms’ “reactive” CSR initiatives were seen as profitdriven and selfish (Study 2).

Bogel (2016)

Perceptions of trust in companies with negative CSR reputations may improve after being presented with CSR communications a second time (indicative of repeated CSR activities), but trust decreases substantively if negative information is presented.

Brough et al. (2016)

Men’s willingness to engage in green behaviors may be influenced by perceived femininity of “greenness” and gender-based stereotypes.

Chen and Chang (2013)

Greenwashing by companies is associated with consumers’ reduced green trust (directly as well as indirectly by negatively influencing green consumer confusion and green perceived risk).

Chylinski and Chu (2010)

Incongruence between consumers’ goals or values and firm actions are associated with increased cynical consumer behaviors.

Davis (1994)

When consumers feel manipulated or exploited by environmental advertising claims they may have less positive ethical attributions about the advertising message.

Ellen et al. (2006)

Consumers may respond negatively to CSR if they perceive the company’s motives to be stakeholder-driven or egoistic.

Forehand and Grier (2003)

Firm-serving motives for CSR may prompt negative consumer responses when the company only expresses public-serving motives, but negative responses can be mitigated if firm-serving motives are acknowledged.

Habel et al. (2016)

When CSR is not attributed to intrinsic motives, it can worsen perceived price fairness (Study 1). When CSR costs are perceived as promotional there may be a negative indirect effect of CSR engagement on perceived price fairness (Study 3).

Hammad et al. (2014) Greater skepticism toward cause-related marketing (CRM) was associated with lower attitudes toward the company, presumably because of respondents’ perceptions of the company’s self-serving motives for CRM. Joireman et al. (2016)

Including concrete CSR claims with supporting imagery can mitigate the negative effect of advertising skepticism on consumers’ purchase intentions.

Kim and Lee (2015)

Congruence between characteristics of a corporate crisis with the company’s CSR activities can lead to perceptions of self-serving and strategic motives for CSR practices, which is associated with greater CSR skepticism.

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Marín et al. (2016)

Perceived corporate hypocrisy may have a negative effect on the motives that consumers attribute to companies’ CSR.

Newell et al. (1998)

Consumers’ perceived deception was negatively associated with advertiser credibility, attitudes toward the ad and the brand, and purchase intentions.

Newman et al. (2014) Consumers are less likely to purchase a green product when they perceive that the company intentionally made the product better for the environment compared to when the same environmental benefit occurred as an unintended side effect. Nyilasy et al. (2014)

When company environmental performance is low, green advertising (versus no advertising at all) may have a negative impact on consumers’ purchase intentions.

Oberseder et al. (2013)

Some consumers perceive CSR efforts as a marketing ploy.

Parguel et al. (2011)

Poor sustainability ratings may prompt perceived extrinsic motives for companies’ CSR communications, leading to negative brand evaluations by consumers.

Rahman et al. (2014) Perceived ulterior motives for hotels’ environmental claims may elicit consumer skepticism, which may reduce the likelihood that they will participate in a linen reuse program and their patronage intentions. Romani et al. (2016)

Consumers who are skeptical react less favorably to CSR initiatives.

Skard and Thorbjørnsen (2014)

The elaboration of critical thoughts about the CSR initiative may occur when source and brand are incongruent.

Skarmeas and Leonidou (2013)

Egoistic- and stakeholder-driven attributions are associated with consumer skepticism toward CSR.

Vanhamme and Grobben (2009)

Companies with a shorter (vs. longer) history of CSR may elicit greater consumer skepticism when using CSR claims in crisis communications, which in turn may be associated with more negative perceptions of the company and its products.

Vlachos et al. (2009)

Suspicious consumers simultaneously entertain multiple CSR negative attributions, which directly influence both internal (i.e. trust) and behavioral (i.e. patronage and recommendation intentions) consumer responses.

Wagner et al. (2009)

Inconsistent CSR information may negatively impact consumers’ perceptions of corporate hypocrisy and thus adversely affect their CSR beliefs about and attitudes toward firms.

Webb and Mohr (1998)

Cause-related marketing (CRM) campaigns were perceived as manipulative by several respondents. People categorized as “skeptics” generally responded negatively to CRM (associated with “skepticism toward advertising” more generally).

White and Willness (2009)

When consumers engage in greater analysis of a company’s social responsibility claims they may become suspicious of incongruent messages and have more negative company and product evaluations. (continued)

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Table 9.1 Continued Article

General conclusion or inference from study findings

Yoon et al. (2006)

When consumers become suspicious of a company’s motives for social or environmental initiatives, it activates negative attributions leading to negative company and product evaluations.

Employees Beckman et al. (2009) The adoption of CSR programs may be inhibited if they are perceived to be inauthentic by employees or external stakeholders, which further leads to poor relationships and feelings of distrust. Brunton et al. (2015) Some employees may feel frustrated or disillusioned toward their employer’s CSR. McShane and Cunningham (2012)

Perceptions of inauthentic CSR may have negative outcomes.

Onkila (2013)

Suggests a category of workers for whom definitions of their employer’s CSR is associated with cynicism, frustration, stress, and discomfort in their own work.

Rodrigo and Arenas (2008)

Reveals a category of “dissident” workers who may have negative attitudes toward their employer’s CSR programs and, by extension, the firm itself.

Vlachos et al. (2010)

Egoistic CSR motives can negatively influence salesperson trust in the company.

West et al. (2015)

CSR increases employee trust and decreased distrust only among those employees who were low in “social cynicism” (the belief that institutions or people who hold power cannot be trusted)—despite the company’s positive CSR record.

Job Seekers Bridoux et al. (2016)

Some people may react negatively when faced with an organization’s CSR tradeoffs—i.e. when the company allocates disproportionate resources to a stakeholder group other than their own.

Jones et al. (2016)

Some job seekers may be unaffected, or even repelled, by a company’s CSR, for reasons that suggest the presence of skepticism or cynicism toward such practices.

Rupp et al. (2013)

Individuals and employees who perceive they are less fairly treated in terms of distributive justice tend to be more sensitive to their company’s CSR efforts.

Stakeholders Crilly et al. (2016)

Some stakeholders may have more negative evaluations when a company exhibits decoupling (gaps between an organization’s formal structures and their ongoing activities).

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consumers, and much more research is needed to understand the psychology of CSR in an employment context.

When CSR backfires with consumers In the early s, Stisser () observed a peak in the public’s concern about the natural environment, “environmental action” becoming mainstream, and social movement building up around the cause. Stisser (, ) also suggested that there is a commensurate “backlash” against the environmental bandwagon, which is driven “partly by growing frustration, as more consumers report confusion about what constitutes ‘good’ or ‘bad’ environmental practice. It has also been stimulated by growing public skepticism of marketing that touts environmental benefits to gain short-term sales advantage”. Throughout the s, the consumer behavior literature on CSR and skepticism in particular grew substantially, along with investigating moderators and mediators of the association between CSR in advertising and outcomes like purchase intentions and evaluations of the company. Much of this work has been based on attribution theory. For instance, in their classic study, Forehand and Grier () examined whether firmserving attributions, when inconsistent with the firm’s expressed motives, lowered consumers’ evaluations of the firm. In their sample of  university students, when individuals were asked to think about a firm’s motives for a volunteerism program, the presence of obvious benefits to the firm negatively influenced evaluations of the company when it claimed to have public-serving motives, but did not have a negative impact on evaluations of the company when it acknowledged its firm-serving motives. The authors concluded that negative reactions to CSR are at least partly due to perceived deception. Ellen et al. () also examined the attributions made by consumers about the company’s underlying motives for CSR, using a sample of employees at a large university. Self-serving attributed motives were viewed positively when they were perceived as strategic (to gain customers or profits), and negatively when they were perceived as egoistic (to gain positive publicity). Likewise, other-centered attributed motives were regarded positively when they were values-driven (i.e. indicative of genuine care for the cause), and negatively when they were stakeholder-driven (stakeholders expect such practices). A more recent study examined similar types of attributed motives, but with an online survey about grocery retailers, finding that both egoistic- and stakeholder-driven motives increased consumer skepticism, while values-driven motives decreased skepticism (Skarmeas and Leonidou, ). The same study found that skepticism about CSR in turn encouraged unfavourable word of mouth, negatively impacted retailer equity, and lowered resistance to negative information about the company. Other studies have similarly shown that when consumers become suspicious of a company’s motives for social or environmental initiatives, it activates negative attributions (Yoon et al., ) and greater analysis of the company’s social responsibility claims (White and Willness, ), leading to negative company and product

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evaluations. Overall, numerous studies have highlighted the importance of the motives that consumers attribute to a company’s CSR practices and messages (e.g. Davis, ; Marin et al., ; Nyilasy et al., ; Vlachos et al., ). Studies have also found negative reactions to green products when consumers perceived that their production drew resources away from product quality (Newman et al., ), and greater perceptions of corporate hypocrisy when companies’ CSR claims contradicted other information about their practices (Wagner et al., ).

When CSR backfires among employees and job seekers Although consumer studies can potentially provide some understanding into how and why people might respond negatively, the context is arguably different and the stakes are higher for employees and job seekers relative to consumers. For instance, employees are likely to have more information about the CSR practices of the company they work for (McShane and Cunningham, ), relative to its consumers or other external stakeholders (although a few studies have shown that awareness of CSR can be quite low, even among the company’s own employees; e.g. Bhattacharya et al., ; Zerr and Willness, ). Employees are also apt to place greater importance on the authenticity and image of their employer’s CSR practices because of the implications for their own self-concept and identity (McShane and Cunningham, ). Scholars have suggested that employees are likely very concerned about their organization’s greenwashing practices, and that this could have deleterious effects on trust, commitment, and productivity (Lyon and Montgomery, ), which can, of course, have serious consequences for organizational effectiveness. Likewise, job seekers may be particularly concerned with value fit of their future workplace and how they expect to be treated by a potential employer, both of which may be inferred based on the organization’s CSR (Jones et al., ). Negative reactions to an organization during the job search process could lead to negative word of mouth or reputation, which can impact organizational attractiveness (Van Hoye and Lievens, ), making it more difficult to attract talent. Despite the potential for consequential harm through backfiring CSR efforts, very little empirical research has examined the phenomenon in OB and HRM. Recently, however, a few studies have uncovered the potential for negative reactions to CSR, and others have found evidence of negative reactions, in their broader investigation of employee or job seeker responses to CSR (i.e. few studies to date have explicitly examined negative reactions to CSR, but some have uncovered this phenomenon more indirectly). Importantly, most of these studies have used qualitative methodologies, which permits study participants to provide a broader range of responses and reactions, versus quantitative methods like surveys or experiments, which restrict participant responses to what is a priori specified by the researcher. One qualitative study revealed the importance of employee perceptions of the authenticity (truthfulness, accuracy, reliability, and genuineness) of their employer’s CSR programs, shaped by beliefs that the organization’s CSR is an accurate reflection of its true self (McShane and Cunningham, ). Although these researchers did not find

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negative reactions to CSR per se, they did find that employees were differentiating between authentic and inauthentic CSR practices and intentions, and they speculate that perceptions of authenticity may influence the relationship between CSR and employees’ responses to it. Vlachos et al. () surveyed intrinsic (i.e. genuine desire to benefit society) vs. extrinsic (i.e. seeking benefit for the company) CSR attributions among  employees across three large manufacturing firms and found that intrinsic CSR motives were linked with job satisfaction, but extrinsic CSR motives were not (although they did not find a negative effect per se). Edwards and Kudret () likewise found some null effects between dimensions of CSR and employee outcomes, such as pride, commitment, and performance, but they did not find negative effects. In their examination of employees’ perceptions of how companies communicate CSR with internal stakeholders (i.e. employees), Brunton et al. () described some participants’ responses to interview questions that reveal disillusionment and frustration toward their employer’s CSR. For instance, one employee remarked that “I believe the company I work for is extremely concerned about their public image. They are less concerned, however, about the worth of their staff . . . Sometimes I feel that [company’s] CSR is a bit of a token gesture when it comes to their staff ” (Brunton et al., , ). The authors suggested that this was not an isolated comment. Their findings are poignant, given that all of the companies included in their research were members of the New Zealand Sustainability Council, a requirement of which is to demonstrate “tangible ongoing evidence of their practice of CSR” (p. ). Rodrigo and Arenas () observed some similar sentiments in their qualitative study of employees in Chile, in terms of the tension between employees’ perceptions of how they are treated versus the company investing in CSR that presumably benefits others. One of their participants remarked (in part): “I just can’t understand why the company spends so much money on these activities” (p. ). They described a typology of employees’ attitudes toward CSR including committed (enthusiastic about CSR and concerned about social justice), indifferent (concerned about one’s own career and generally not oriented to social concerns), and dissident (work is a source of income and companies should invest in workers rather than CSR programs). In her rhetorical exploration of employee emotions pertaining to how CSR relates to their daily jobs, Onkila () found both positive ( percent) and negative ( percent) emotional arguments in her analysis of twenty-seven interviews in a Finnish firm that had recently undergone downsizing. Positive emotions that emerged when discussing the organization’s CSR included pride, fulfillment, enthusiasm, and gratification, while negative emotions included cynicism, frustration, and stress. Interestingly, employees also expressed their connection to CSR in terms of the negative emotions that they wished to avoid, such as shame or embarrassment (i.e. wanting to receive positive feedback from customers and peers about the organization’s CSR record, and an awareness that they could experience embarrassment if their employer acted irresponsibly). West et al. () conducted an employee survey in a large Canadian retailer that has a history of engaging in CSR. They found that CSR increased employee trust and

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decreased distrust only among those employees who were low in a characteristic called “social cynicism” (the belief that institutions or people who hold power cannot be trusted)—despite the company’s positive CSR record. Employees who were higher in social cynicism were not negatively impacted by CSR per se, but they seemed to perceive benefit in company practices that benefited them directly (such as specific work-related practices), rather than CSR that benefits a broader range of stakeholders. In perhaps the first empirical study of whether and why some job seekers might be unaffected, or even negatively affected, by a potential employer’s CSR practices, Jones et al. () content-analyzed open-ended responses provided by study participants about why they were (or were not) attracted to potential employers. The participants viewed the webpages of two companies in which there was embedded information about one of the companies’ community or environmental practices (the experimental manipulation). Overall, the results showed that many people were indeed attracted by the CSR practices, for reasons evidencing signaling theory mechanisms (e.g. that the CSR practices signaled a positive working environment, which job seekers found attractive). However, some people (albeit a small percentage) reported being unaffected, or even repelled, by the company’s CSR, for reasons that suggested feelings of skepticism or cynicism toward such practices. Bridoux et al. () examined reactions to self- (e.g. employee) versus other- (e.g. supplier) directed CSR in both a consumer and job seeker context using a scenariobased study. They found that some participants reacted negatively when faced with the organization’s CSR tradeoffs—that is, when the organization allocated disproportionate resources to a stakeholder group other than their own. However, stakeholders did not always respond in a self-interested manner. Factors such as respondents’ otherorientation and trust in the organization mitigated their negative reactions to CSR tradeoffs. The authors also found some differences in the way consumers versus prospective employees respond to CSR tradeoffs. They concluded that this was logical because “prospective employees’ total personal welfare is much more dependent on the firm’s CSR toward employees, than customers’ total personal welfare is on the firm’s CSR toward customers” (p. ).

C  A N R  CSR

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What are the Reactions? Ultimately, it is people’s perceptions of CSR that affect their reactions to it, as opposed to actual organizational practices or behaviors (El Akremi et al., ; Rupp et al., ; see also Jones, Chapter ). And notably, perceptions and “reality” do not always align (Peloza et al., ). Much of what is written about people’s reactions to CSR generally

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highlights either “state” or “trait” level phenomena. In other words, (a) something about the situation, organization, or particular CSR claim is associated with negative responses to CSR, which would be indicative of a “state” or stimulus that leads people to respond unfavourably, or (b) something about the perceiver, like an individual difference variable, leads some people to respond unfavourably to CSR in general, suggesting a “trait”-like response that is stable over time and context. Beyond these general themes, and even within them, there is essentially no consistency in how constructs are described, measured, or tested. Further obscuring a clear understanding of stakeholder reactions to CSR is the fact that constructs pertaining to people’s perceptions of CSR have been studied across several disconnected disciplinebased literatures (e.g. consumer behavior, organizational psychology, HR), and the construct space is poorly understood. Meaningful conceptual distinctions exist but are rarely recognized, and distinct constructs are sometimes treated as interchangeable. Measurement problems are also pervasive, including low internal consistencies, limited validity evidence, and unclear factor structures (El Akremi et al., ). Scholars have emphasized the need for conceptual clarity and improvements in measurement with respect to CSR evaluations and reactions overall (Gond et al., ). In a review of several literatures (e.g. OB, HR, and consumer behavior), Willness and Jones () located several constructs intended to measure responses to CSR, including individual differences like attitudes toward social responsibility of business (Kolodinsky et al., ), and situation-based constructs about a given company’s practices such as perceived extent of CSR (Jones et al., ), consumers’ perceptions of corporate social responsibility (Oberseder et al., ); attitudes about a CSR practice (Jones, ), attributed motives for CSR (Vlachos et al., ), and corporate stakeholder responsibility (CStR) scale (El Akremi et al., ). Notably, none of these was designed to assess negative responses or reactions. There is a CSR skepticism measure presented in public relations literature, but it conflates skepticism (e.g. disbelief) with cynicism, motives, management responsibility, and CSR outcomes (Rim and Kim, ). To advance theory and practice by understanding stakeholders’ reactions to CSR— whether positive or negative—a critical step forward is to clarify the construct space by defining and delineating relationships among conceptually related constructs. Toward that end, Willness and Jones () have explored this construct space further and proposed at least two meaningfully different types of negative reactions to CSR. The first construct that we propose is CSR cynicism, defined as a stable individual characteristic of general disillusionment or apathy toward CSR across contexts. A second related but distinct construct is skepticism toward CSR claims, which focuses on a particular firm’s specific CSR practice or its overall CSR. Scholars lament that “cynicism” and “skepticism” are used interchangeably in the literature (Tan and Tan, ) despite being conceptually distinct (Mohr et al., ), and that cynicism is an antecedent to skepticism (Obermiller and Spangenberg, ). As Chylinski and Chu () explain, “repeated dissatisfaction (via unmet expectations) establishes a dominant belief that the marketing agent has ulterior self-serving motives (mistrust), and habitual doubt of the marketing agent’s claims (skepticism). In this sense, cynicism is a coping

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process, where consumers learn to become defensive after observing that they have been taken advantage of ” (p. ). Helm () likewise differentiated between cynicism and skepticism in her interview study of consumers’ cynical attitudes about the consumption process, and how this develops. She concluded that there are shared attributes between skeptical and cynical consumers; however, skeptical consumers do not have a sense of being manipulated, as cynics do. We adopt this approach in the context of CSR, and suggest that CSR cynicism is an individual difference construct (i.e. “trait”) and that it is an antecedent of, but conceptually distinct from, skepticism toward CSR claims (i.e. “state”) (see also Mohr et al., ; Obermiller and Spangenberg, ; Tan and Tan, , for differentiations and definitions of cynicism and skepticism).

CSR cynicism We assert that CSR cynicism is—like other forms of cynicism—a generalized attitude that is typically stable across contexts. We offer a working definition based on prior cynicism research (e.g. Andersson, ) that CSR cynicism is a pervasive distrust, dislike, or apathy toward CSR practices and communications, regardless of which organization or particular CSR practice is being observed. In other words, an individual who is high in CSR cynicism would feel that organizations in general pretend to care more about CSR than they really do, and are prone to making misleading (or even dishonest) claims about their environmental or social practices. Other researchers have looked at more specific forms of cynicism—cynical attitudes toward a particular type of stimulus across situations—such as consumer cynicism (e.g. psychological frames used to neutralize marketing tactics and other persuasion attempts (Odou and de Pechpeyrou, ; see also Chylinski and Chu, ; Van Dolen et al., ), employee or organizational cynicism (e.g. toward top management; Kim et al., , or toward the organizational in general; Dean et al., ; Evans et al., b), or political cynicism (e.g. toward politicians who promise more than they can deliver; Van Dalen et al., ).

Skepticism toward CSR claims This related but distinct construct reflects people’s situational reactions to a particular company’s CSR practices or claims. Again, we offer a working definition derived from the literature on skepticism (e.g. Forehand and Grier, ; Obermiller and Spangenberg, ; Webb and Mohr, ) such that skepticism toward CSR claims is characterized by doubt, disbelief, and/or suspicion about an organization’s motives for engaging in CSR—it is inextricably tied to attributions. Forehand and Grier () recognized that one of the factors that elicits consumer skepticism is companies’ “social marketing,” yet they are among the only researchers to examine skepticism toward CSR in particular (in their case, employee volunteerism, and so forth). To assess whether these are potentially useful constructs for capturing people’s negative reactions to CSR, we conducted an exploratory pilot study (Willness and Jones, ). We collected field data from  job seekers who were attending a career

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fair in Western Canada. Respondents completed items that we developed to assess CSR cynicism (conceptualized as a stable individual difference variable). They also completed ratings of an organization that they identified from among their feasible employment options, including measures of the perceived extent of CSR, and skepticism about that organization’s CSR practices or claims. These measures were embedded within a larger questionnaire assessing several other individual differences and recruitment outcomes. We found compelling preliminary evidence for these distinct constructs. For instance, CSR cynicism was positively associated with skepticism toward an organization’s CSR over and above similar, but non-CSR related, individual differences like trait cynicism (Tan and Tan, ) and trust propensity (Colquitt et al., ). In general, we concluded that, although more research is needed, CSR cynicism and skepticism toward CSR claims appear to be constructs that exist with meaningful frequency in the population, and are distinct from each other and from related constructs.

D  F R

.................................................................................................................................. Beyond the lack of construct clarity and measurement development in this domain, there are several additional directions for future research that would substantially contribute to the literature on CSR backfire effects, particularly among employees and job seekers, which are nearly unstudied in this regard. In this final section, I first briefly highlight some promising theories and frameworks that can be used as the basis for forming research questions and testable hypotheses about when and why stakeholders react negatively to CSR. Next, I offer some key areas for future inquiry, toward the goal of mitigating negative reactions to CSR so that organizations can be encouraged and motivated to conduct business in environmentally and socially responsible ways, and to justify continued investments in CSR for the good of society and the wellbeing of employees.

Theories and Frameworks Attribution theory As noted, many studies in the consumer behavior literature have examined negative responses to CSR using attribution theory (i.e. attributed motives for CSR) to explain the phenomenon. Studies of employees (Vlachos et al., ) and job seekers (Jones et al., ) have likewise suggested attributed motives as an important mechanism through which people’s reactions to CSR are formed. Attribution theory offers a very fruitful platform from which to examine and understand people’s reactions to CSR (whether positive or negative). Broadly speaking, people tend to respond more positively to CSR when they perceive that the organization has other-serving motives, also termed

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intrinsic (Janssen et al., ; Vlachos et al., ) or substantive (Donia and Tetrault Sirsly, ) motives—as opposed to self-serving motives, also called firm-serving (Forehand and Grier, ), extrinsic (Vlachos et al., ), symbolic (Donia and Tetrault Sirsly, ), or egoistic (Ellen et al., ) motives—for its CSR practices. An important question, then, is what conditions or factors lead stakeholders to attribute self-serving, extrinsic, or disingenuous motives to a company’s CSR practices? Consumer studies have found that stakeholders may form negative attributions when company messaging does not match the firm’s actual practices (e.g. Nyilasy et al., ) and when the firm is perceived as concealing its self-serving motives (Forehand and Grier, ). These phenomena are exhibited in the backlash following BP’s attempts to “greenwash” its CSR report after the disastrous Deepwater Horizon oil spill (e.g. Schwartz, ). Jones et al. () found that job seekers might likewise question company motives for CSR, but more research is needed to understand why this occurs. Thus, attributed motives for CSR are a prominent, and promising, avenue for understanding when and why some people may react negatively to CSR. Such knowledge could inform best practices for creating, implementing, and communicating about CSR practices and programs. In other words, if we can understand the conditions that are more likely to lead to attribution of self-serving motives for CSR, and thus activate stakeholders’ suspicion or skepticism, perhaps backfire effects can be prevented.

CSR versus CSiR Another promising frame is the consideration of CSR and corporate social irresponsibility (CSiR) as distinct constructs with different emotional and behavioral consequences for stakeholders, rather than as opposite ends of a single continuum (Voliotis et al., ). Voliotis et al. assert that the perceived culpability of the organization in its CSiR and the controllability of the causes for the CSiR transgression are critical determinants of people’s reaction to it. The authors thus position stakeholders’ attributions of the CSiR as the explanatory mechanism, paralleling prior research on attributed motives for CSR. With respect to negative stakeholder reactions, however, it stands to reason that people may respond negatively to irresponsible practices, moral transgressions, and injustice (without meaning to detract from the importance of studying CSiR). What may be more concerning, however, is the emerging possibility that some stakeholders can and do respond negatively to positive CSR practices (e.g. Jones et al., ). Voliotis et al.’s contention that CSR and CSiR are distinct should be heeded in future research, because although attributions may be at work in both cases, the causes, mechanisms, and consequences for both organizations and individuals are likely quite different (for additional consideration of CSiR, see Ormiston and Wong, ). Relatedly, research has found that having a reputation for CSR may provide a protective effect for companies that experience a corporate crisis (like a product failure, for instance), but in other cases, being known for CSR may actually exacerbate people’s negative perceptions of the company in times of crisis. The key seems to once again be whether stakeholders attribute intrinsic or extrinsic motives to the company’s CSR

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practices (see Janssen et al., , for a review). Bogel () examined the effects of CSR messages on consumer trust when the company had a prior negative reputation, and her findings suggest that there was some improvement in trust, although shortterm and not robust against further negative information about the company.

Justice theories and principles Work by Rupp and colleagues frames CSR as inherently tied to justice principles, particularly fair treatment of the self and of others. Much of what is discussed in this chapter is essentially highlighting third-party justice perceptions, which is how one reacts to the treatment of targets other than the self, or as Rupp (, ) explains, “how employees react to the actions taken on behalf of the firm.” CSR targeted toward external stakeholders, such as community involvement or supporting environmental causes, is beyond employee, job seeker, or consumer self-interest, and yet treatment of third-party stakeholders elicits concern and support (Rupp et al., ). Rupp () describes three main motives to explain people’s reactions to CSR, including instrumental (e.g. CSR functions as a proxy for employer trustworthiness and suggests a likelihood of fair treatment toward the self), relational (e.g. CSR can fulfill a need for belongingness through opportunities for involvement and sharing social values), and moral (e.g. CSR is the right thing to do). Justice theories and frameworks can help to explain why people might react negatively (emotionally, cognitively, attitudinally, or behaviorally; Rupp, ), particularly given the ethical and moral expectations attached to such actions. Indeed, CSR tends to be viewed as a morally and ethically charged construct (Carroll, ; De Roeck and Delobbe, ; Rupp et al., , ; Valentine and Fleischman, ). It is different than an organization claiming (accurately or not) to be efficient or that its products have certain functional characteristics. Claiming to be socially or environmentally responsible, however defined, carries with it certain expectations that the organization is attempting to be seen as trustworthy, ethical, and good. As Rupp and colleagues assert, “CSR is not only expected to meet the instrumental, relational, and certainty needs of applicants and employees but also their moral and ethical (i.e., deontic) needs, via the societal goodwill created by CSR initiatives” (Rupp et al., . ; see also Rupp and Williams, ). CSR is therefore also tied to principles of justice, such that it involves treatment of the self (i.e. an employee) as well as others (e.g. communities, the natural environment, and so forth; Rupp, ). CSR practices and communications may raise people’s expectations of an organization, and in particular the expectation that it will live up to its claims and uphold its values (Janssen et al., ).

Integrated frameworks Notwithstanding the need for more theoretical development in this field, there are published theoretical and conceptual frameworks and models that provide many fruitful avenues for empirical work on stakeholders’ negative reactions to CSR. Du et al. () offer a model of CSR communications that, although created in the consumer

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behavior context, should generalize well to organizational research more broadly. Gond et al. () present a comprehensive model of the psychological microfoundations of CSR, with explicit consideration of reactions (e.g. attributions, justice concerns, etc.) and negative outcomes (e.g. deviance, unethical behavior). Likewise, Glavas () provides a detailed model of CSR research focusing on incumbent employees, highlighting important mediators and moderators that can inform future research. While not a theoretical model per se, Jones et al. () offer testable multi-level research propositions for examining the ways in which micro-level phenomena (such as job seeker or employee reactions to CSR) can negatively affect organizational-level outcomes. Donia and Tetrault Sirsly () also provide testable propositions for employee reactions to CSR based on whether they believe the company’s practices are substantive (i.e. genuine and for the benefit of society) or symbolic (i.e. an effort to garner a positive company image).

What Factors Might Reduce the Risk of CSR Backfire Effects? There are several factors that prior research suggests may mitigate negative reactions to CSR, including perceived authenticity, CSR communication strategies, information source credibility, and the type of CSR. Again, much of what we know about these factors is derived from marketing and consumer behaviour, leaving the OB and HR context wide open for discovery and in much need of empirical research (Willness and Jones, ).

Honesty is the best policy Authenticity of CSR practices and communications appears to be a key factor in how people perceive and respond—whether positively or negatively—to an organization’s initiatives. Beckman et al. () conducted a qualitative study in Chile, interviewing individuals in a variety of organizations, including consultants, managers, others in leadership positions, and a member of the government. Their thematic analysis revealed the importance of authenticity in people’s acceptance of CSR. The adoption of CSR programs was slower, or even prevented, if they were perceived as inauthentic. Inauthentic CSR was associated with poor stakeholder relationships and distrust. Conversely, perceived authenticity provided a boost to the support that a CSR program received, even when stakeholders were “antagonistic” (Beckman et al., , ). The authors concluded that authenticity was a critical factor in the success or failure of CSR initiatives. McShane and Cunningham’s () interviews revealed that employees drew inferences about authenticity (versus inauthenticity) of CSR based on five types of cues: alignment or consistency between sources of CSR information, the firm’s commitment of tangible resources toward CSR, staff and management’s emotional engagement in

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CSR, the embeddedness of CSR in the “fabric” of the organization, and whether the CSR programs exhibited principles of justice. Mazutis and Slawinski () also point to authenticity (comprised of distinctiveness and social connectedness in their paper) as an important factor in overcoming society’s growing skepticism toward CSR (see also Alhouti et al., ).

The CSR communication conundrum There are several challenges inherent in an organization communicating about its CSR practices, and first among them is the paradox that reputational benefits can only be realized if stakeholders are aware of the organization’s CSR, yet they may respond with skepticism to such promotions and messages (Dawkins, ). Thus, companies are simultaneously encouraged and discouraged from communicating about their CSR (Morsing et al., ). Du et al. () offer a comprehensive conceptual framework for CSR communication that can provide some guidance through these challenges, and they specifically focus on key issues such as stakeholders’ lack of awareness and the potential for unfavourable attributions and skepticism. They highlight important considerations such as emphasizing the organization’s commitment to CSR (e.g. tangible inputs including the amount of resources dedicated to a cause and the length or “durability” of the relationship), the impact of CSR initiatives (e.g. outputs such as quantifiable benefits to the cause or to society), CSR fit (e.g. the extent to which the cause is congruent with the company or brand), and CSR motives. Like prior consumer research, Du et al. () advocate that being upfront about self-serving motives, rather than presenting CSR as purely other-serving if it is not, can reduce skepticism. For instance, TOMS Shoes is generally perceived to be a social enterprise, but CEO Blake Mycoskie is ultimately unapologetic about the company’s simultaneous profit and philanthropy motives (Lebowitz, ). Similarly, the former CEO of Starbucks, Howard Schultz, described the company’s education bursary program as a way to achieve a balance between profit and social impact, but also as a way to retain employees whom he hoped would move up in the Starbucks company and continue to help the bottom line (Woodruff, ). This philosophy is aligned with Pless et al.’s () exploration of leaders’ responsibility orientations, in which they describe “opportunity seekers” and “integrators” (p. ) who believe businesses are accountable to a broader range of stakeholders, while varying on the degree to which shareholders are the dominant group. Other study findings with respect to reducing or mitigating skepticism include using a combination of concrete claims with supporting imagery, which has been associated with more favorable responses to CSR communications, even among consumers who were higher in advertising skepticism (Joireman et al., ). Wagner et al. () conducted a series of laboratory studies and found that when companies communicate about their CSR, yet participants observe conflicting behavior (i.e. practices that are not consistent with the CSR claims), it sparks perceptions of corporate hypocrisy, whether the messages were proactive (before the conflicting

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information was presented) or reactive (after the fact). Participants’ CSR beliefs and attitudes toward companies were also negatively impacted by the perceived hypocrisy. However, communicating about CSR after the fact seemed “less bad,” and the level of perceived hypocrisy was slightly lower. Increasing the relative abstractness of proactive CSR messages (i.e. making them less specific) and increasing the concreteness of reactive CSR strategies also seemed to reduce subsequent perceptions of hypocrisy somewhat. In general, the timing of CSR communications (e.g. proactive versus reactive CSR messages) does seem to matter. Studies in consumer behavior have shown that reactive strategies are generally viewed negatively (Groza et al., ), while proactive strategies foster more altruistic attributions for the company’s CSR efforts and can result in more favorable company evaluations (Becker-Olson et al., ; Ellen et al., ). The BP oil spill provides a good case study here as well. Prior to the disaster, BP was among the most praised companies in terms of sustainability reporting (Cort, ). After the oil spill, there was widespread criticism from the public and news media because of the company’s reactive efforts to dramatically downplay the consequences and communicate a positive portrayal in its CSR reports (Schwartz, ). Tata and Prasad () present another model for CSR communications based on impression management theories that is applied to situations where the organization’s current CSR image (i.e. how the target audience perceives its CSR) and its desired CSR image (i.e. its CSR identity, or how it would like to be perceived) are incongruent. They offer several “structures” of CSR communication (e.g. direct-indirect, anticipatory-reactive, image enhancing-image correcting) that may address CSR image issues, depending on moderators like how important the CSR image is to the organization and to its target audience, and the “publicness” of the action (e.g. media attention or public scrutiny). Their paper provides several propositions that have yet to be empirically tested. Perks et al. () also present a model and propositions for CSR communications based on impression management theories, as well as legitimacy theory, which they test against an analysis of CSR advertisements found in Time and The Economist to assess the prevalence of different types of CSR communication strategies. Their findings suggest that there was scant substantial information contained in corporations’ CSR advertisements, and that tactics like diverting attention away from corporate irresponsibility were prevalent, again calling the BP example to mind. Their conclusions suggest that some of the corporations in their sample were not adhering to best practices, such as using proactive CSR communication strategies or associations with third-party organizations (Perks et al., ). They did not examine stakeholders’ reactions to the advertisements or tactics, but their model could nevertheless inform future research questions. In Peloza et al.’s () examination of why stakeholder perceptions of corporate sustainability differ from the “reality” of companies’ practices, they provide numerous recommendations for more effective development and delivery of sustainability messages, which again can assist organizations’ CSR communication strategies and also inform future research questions into stakeholder reactions.

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Information source credibility Credibility is a key factor in people’s acceptance or evaluation of messages (e.g. Isaac and Grayson, ). The source through which stakeholders learn about an organization’s CSR, such as their own public relations department or advertisements, versus a third party like the media, will likely affect how credible or legitimate the CSR message is perceived to be (e.g. Groza et al., ). Messages from sources that are internal to the organization can activate attributions of self-serving motives, which calls credibility into question (Groza et al., ; Yoon et al., ). Skard and Thorbjornsen () examined the source of CSR information, and found that third-party publicity (i.e. information communicated from sources outside the organization itself) is indeed evaluated more positively by consumers than company advertising about CSR, but that the pre-existing reputation of the source moderated this relationship. They also examined a number of mediators that can explain the relationship between CSR information source and brand reputation, including persuasion knowledge, brand-cause fit, and attitudes toward sponsorship. Morsing et al. () likewise recommended that CSR communication occur through a third party, such as the media, to reduce perceptions that the messages are self-serving on the part of the company. Of course, this may not always be practical or even possible, and media communication may involve other forms of reputational risk (e.g. the messages are not within the organization’s control; Du et al., ; Willness and Jones, ). But the principle is that arms-length information from sources that are outside the organization may elicit less skepticism and be perceived as more credible. Du et al. () suggest that another way to balance the control-credibility tradeoff is to leverage employee and consumer advocacy and word of mouth, such as through testimonials or social media platforms like Facebook. To date, information source credibility relating to CSR communications and its effect on people’s perceptions or reactions to CSR practices, or the company itself, has not been empirically tested in an employment or recruitment context (Willness and Jones, ). Thus, there is much opportunity for future research.

Examining and comparing different dimensions of CSR As noted at the outset, the majority of published research to date has examined stakeholders’ (usually consumers) reactions to environmental practices and communications, with a burgeoning, but still recent and emerging, literature on reactions to various forms of “greenwashing.” There is very little research that examines reactions to other types of CSR, such as community involvement, or that compares responses to different types of CSR within a single study. Prior research suggests that there could be important and meaningful differences (Rupp et al., ). For instance, community involvement may elicit stronger positive signals than proenvironmental practices, suggesting that community-oriented CSR could be interpreted as more commendable by job seekers (Jones et al., ). Likewise, Bridoux et al. () observed differences in how their participants responded to CSR toward

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the environment, versus suppliers, in developing countries. In their laboratory study, Wagner et al. () found that perceptions of corporate hypocrisy were slightly higher in the study condition pertaining to environmental CSR, versus conditions that described employee treatment or maintaining local employment. Morsing et al. () cite differences in Danish public perceptions of which aspects of corporate citizenship are “most essential,” with treatment of employees receiving  percent endorsement, treatment of the environment receiving  percent, and community involvement receiving only  percent. In Edwards and Kudret’s () research on employee responses to CSR, they simultaneously examined reactions to multiple dimensions of CSR, or what they term “multi-foci CSR.” Although they found positive associations between customerfocused, environmental, and community CSR, with outcomes including employee pride, commitment, and performance, the results were varied. Further, they did not find positive associations with respect to CSR directed at shareholders, and the authors acknowledge that shareholder CSR could be viewed as outside most understandings of what constitutes CSR. Thus, one empirical question is whether stakeholders would be more or less skeptical toward CSR practices that are considered “discretionary” (e.g. community involvement, pro-environmental practices) versus “business imperative” (e.g. ethical business practices), and whether there are differences in expectations for the extent of firm performance on these dimensions—perhaps also depending on how such practices are communicated or promoted. Another question is whether CSR related to the environment might be judged more harshly than other forms of CSR due to rampant greenwashing. Or might stakeholders be more accepting of green practices because they could be more easily verifiable and might have more readily measurable impacts (versus community involvement, for example)? Lastly, future research should further examine reactions for internally versus externally focused CSR practices (e.g. CSR directed toward the organization’s own employees, versus the broader community), as well as their respective CSR communication strategies.

Cross-cultural and comparative research Beckman et al.’s () qualitative study in Chile suggested some similarities with North American research on CSR (i.e. the importance of authenticity). However, they also note some important culturally specific aspects of the study context relative to CSR, such as the context of skeptical or even “antagonistic” stakeholders, a lack of demand for CSR on the part of governments and consumers, and the focus on CSR related to community and employees, as opposed to the natural environment. This suggests a need for more cross-cultural research on stakeholder responses to CSR, and perhaps comparative studies contrasting the relevant cultural aspects described in Beckman et al.’s () Chilean study with regions where CSR is now mandatory, such as in India (e.g. Nair and Kalagnanam, ). Another study described the context in Denmark as a society in which  percent of the public believes that

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companies should engage in CSR, yet the population is highly skeptical about companies that promote such practices (Morsing et al., ). Differences have also been observed between Spanish and UK consumer perceptions of CSR (Singh et al., ).

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.................................................................................................................................. Understanding how stakeholders perceive CSR is more important than ever as companies are defending against claims of greenwashing and anti-Wall Street sentiment. Examining a broader consideration of the psychology of CSR in terms of both positive and negative responses is important for more fully understanding how people perceive and react to a company’s CSR practices, and ultimately, to the company itself. To date, most research has focused on positive perceptions, responses, and impacts of CSR. The vast majority of published research that examines people’s negative reactions to organizations’ corporate social responsibility practices and communications has been conducted in a consumer behavior context. Several important insights can be derived from this prior work, including the critical role of attributed motives for CSR, the pervasiveness of skepticism, and important considerations such as authenticity and credibility. However, there is a marked dearth of research on other stakeholder groups who arguably occupy a higher stakes association with an organization, namely job seekers and employees. Recent studies suggest that these stakeholders may likewise react negatively even to well-meaning CSR efforts, and that CSR cynicism and skepticism toward CSR claims are meaningful constructs that exist with some frequency in the population. Future research would benefit from applying theoretical lenses such as those pertaining to attributions and organizational justice, and dedicating significant attention to construct clarity and measurement development. Additionally, more work is needed to examine the effect of information source credibility, the effectiveness of CSR communication strategies, and potential differences in reactions to various dimensions of CSR. Ultimately, greater understanding of the psychology of CSR can facilitate the adoption of CSR practices that create meaningful mutual benefits, which in turn will encourage and enhance companies’ continued investments in CSR, and ultimately lead to positive social impact.

R *References marked with an asterisk are featured in Table .. Aguinis, H. . Organizational responsibility: Doing good and doing well. In S. Zedeck (ed.), APA Handbook of Industrial and Organizational Psychology, iii. –. Washington, DC: American Psychological Association.

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Jones, D. A. . Does serving the community also serve the company? Using organizational identification and social exchange theories to understand employee responses to a volunteerism programme. Journal of Occupational and Organizational Psychology, , –. Jones, D. A., and Rupp, D. E. . Social responsibility in and of organizations: The psychology of corporate social responsibility among organizational members. In N. Anderson, D. S. Ones, H. K. Sinangil, and C. Viswesvaran (eds), Handbook of Industrial, Work, and Organizational Psychology (nd ed.), –. Thousand Oaks, CA: Sage. Jones, D. A., and Willness, C. R. . Corporate social responsibility, organizational reputation, and recruitment. In K. Y. T. Yu and D. Cable (eds), The Oxford Handbook of Recruitment, –. New York: Oxford University Press. Jones, D. A., and Willness, C. R. . Environmental management practices: Pre- and posthire effects, mechanisms, and moderators. Paper in C. R. Willness (chair), Advancing corporate social responsibility theory through I-O psychology, at the annual meeting of the Society for Industrial and Organizational Psychology, Oahu, HI. Jones, D. A., Willness, C. R., and Madey, S. . Why are job seekers attracted by corporate social performance? Experimental and field tests of three signal-based mechanisms. Academy of Management Journal, , –. *Jones, D. A., Willness, C. R., and Heller, K. . Illuminating the signals job seekers receive from an employer’s community involvement and environmental sustainability practices: Insights into why most job seekers are attracted, others are indifferent, and a few are repelled. Frontiers in Psychology, , Article , –. Jones, D. A., Willness, C. R., and Glavas, A. . When corporate social responsibility (CSR) meets organizational psychology: New frontiers in micro-CSR research, and fulfilling a quid pro quo through multilevel insights. In A. Glavas, C. R. Willness, and D. A. Jones (eds), Corporate Social Responsibility and Organizational Psychology: Quid Pro Quo, –. Lausanne: Frontiers Media. *Kim, H.-S., and Lee, S. Y. . Testing the buffering and boomerang effects of CSR practices on consumers’ perception of a corporation during a crisis. Corporate Reputation Review, , –. Kim, S., and Parke, H. . Corporate social responsibility as an organizational attractiveness for prospective public relations practitioners. Journal of Business Ethics, , –. Kim, T.-Y., Bateman, T. S., Gilbreath, B., and Andersson, L. M. . Top management credibility and employee cynicism: A comprehensive model. Human Relations, , –. Kolodinsky, R. W., Madden, T. M., Zisk, D. S., and Henkel, E. T. . Attitudes about corporate social responsibility: Business student predictors. Journal of Business Ethics, , –. Lebowitz, S. . On the th anniversary of TOMS, its founder talks stepping down, bringing in private equity, and why giving away shoes provides a competitive advantage. Business Insider: Strategy. June . . Lyon, T. P., and Montgomery, A. W. . The means and end of greenwash. Organizations and Environment, , –. Maignan, I., and Ferrell, O. C. . Corporate social responsibility and marketing: An integrative framework. Journal of the Academy of Marketing Science, , –. Manrai, L. A., Manrai, A. K., Lascu, D. N., and Ryans, J. K., Jr. . How green-claim strength and country disposition affect product evaluation and company image. Psychology and Marketing, , –.

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 . 

*Marin, L., Cuestas, P. J., and Roman, S. . Determinants of consumer attributions of corporate social responsibility. Journal of Business Ethics, , –. Mazutis, D. D., and Slawinski, N. . Reconnecting business and society: Perceptions of authenticity in corporate social responsibility. Journal of Business Ethics, , –. *McShane, L., and Cunningham, P. . To thine own self be true? Employees’ judgments of the authenticity of their organization’s corporate social responsibility program. Journal of Business Ethics, , –. Meyer, J. W., and Rowan, B. . Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, , –. Mohr, L. A., Eroglu, D., and Ellen, P. S. . The development and testing of a measure of skepticism toward environmental claims in marketers’ communications. Journal of Consumer Affairs, , –. Morgeson, F. P., Aguinis, H., Waldman, D. A., and Siegel, D. S. . Extending corporate social responsibility research to the human resource management and organizational behavior domains: A look to the future. Personnel Psychology, , –. Morsing, M., Schultz, M., and Nielsen, K. U. . The “catch ” of communicating CSR: Findings from a Danish study. Journal of Marketing Communications, , –. Musafer, S. . Corporate social responsibility: Measuring its value. BBC News: Business. . Nair, A., and Kalagnanam, S. . Limits to nonmarket insurance: A textual analysis of the impact of CSR on media sentiment. Paper presented at the Annual Meeting of the Academy of Management, Atlanta, GA, Aug. *Newell, S. J., Goldsmith, R. E., and Banzhaf, E. J. . The effect of misleading environmental claims on consumer perceptions of advertisements. Journal of Marketing Theory and Practice, , –. *Newman, G. E., Gorlin, M., and Dhar, R. . When going green backfires: How firm intentions shape the evaluation of socially beneficial product enhancements. Journal of Consumer Research, , –. Nickel, P. M., and Eikenberry, A. M. . A critique of the discourse of marketized philanthropy. American Behavioral Scientist, , –. *Nyilasy, G., Gangadharbatla, H., and Paladino, A. . Perceived greenwashing: The interactive effects of green advertising and corporate environmental performance on consumer reactions. Journal of Business Ethics, , –. Obermiller, C., and Spangenberg, E. R. . Development of a scale to measure consumer skepticism toward advertising, Journal of Consumer Psychology, , –. *Oberseder, M., Schlegemilch, B. B., and Murphy, P. E. . CSR practices and consumer perceptions. Journal of Business Research, , –. Oberseder, M., Schlegelmilch, B. B., Murphy, P. E., and Gruber, V. . Consumers’ perceptions of corporate social responsibility: Scale development and validation. Journal of Business Ethics, , –. Odou, P., and de Pechpeyrou, P. . Consumer cynicism: From resistance to anti-consumption in a disenchanted world? European Journal of Marketing, , –. *Onkila, T. . Pride or embarrassment? Employees’ emotions and corporate social responsibility. Corporate Social Responsibility and Environmental Management, (), –. Orlitzky, M., Schmidt, F. L., and Rynes, S. L. . Corporate social and financial performance: A meta-analysis. Organization Studies, , –.

OUP CORRECTED PROOF – FINAL, 19/9/2019, SPi

  



Ormiston, M. E., and Wong, E. M. . License to ill: The effects of corporate social responsibility and CEO moral identity on corporate social irresponsibility. Personnel Psychology, , –. *Parguel, B., Benoît-Moreau, F., and Larceneux, F. . How sustainability ratings might deter “greenwashing”: A closer look at ethical corporate communication. Journal of Business Ethics, , . Peloza, J., Loock, M., Cerruti, J., and Muyot, M. . Sustainability: How stakeholder perceptions differ from corporate reality. California Management Review, , –. Perks, K. J., Farache, F., Shukla, P., and Berry, A. . Communicating responsibilitypracticing irresponsibility in CSR advertisements. Journal of Business Research, , –. Phu, C. N. . Save Africa: The commodification of (PRODUCT) RED campaign. Kaleidoscope: A Graduate Journal of Qualitative Communication Research, , Article . Pless, N. M., Maak, T., and Waldman, D. A. . Different approaches toward doing the right thing: Mapping the responsibility orientations of leaders. Academy of Management Perspectives, , –. Ployhart, R. E. . Staffing in the st century: New challenges and strategic opportunities. Journal of Management, , –. Porter, M. E., and Kramer, M. R. . Creating shared value: How to reinvent capitalism— and unleash a wave of innovation and growth. Harvard Business Review, , –. *Rahman, I., Park, J., and Gen-qing Chi, C. . Consequences of “greenwashing”: Consumers’ reactions to hotels’ green initiatives. International Journal of Contemporary Hospitality Management, , –. Ramus, C. A., and Montiel, I. . When are corporate environmental policies a form of greenwashing? Business and Society, , –. Rim, H., and Kim, S. . Dimensions of corporate social responsibility (CSR) skepticism and their impacts on public evaluations toward CSR. Journal of Public Relations Research, , –. *Rodrigo, P., and Arenas, D. . Do employees care about CSR programs? A typology of employees according to their attitudes. Journal of Business Ethics, , –. *Romani, S., Grappi, S., and Bagozzi, R. P. . Corporate socially responsible initiatives and their effects on consumption of green products. Journal of Business Ethics, , –. Rupp, D. E. . An employee-centered model of organizational justice and social responsibility. Organizational Psychology Review, , –. Rupp, D. E., and Williams, C. A. . The effect of regulation as a function of psychological fit: A re-evaluation of hard and soft law in the age of new governance. Theoretical Inquires in Law, , –. Rupp, D. E., Ganapathi, J., Aguilera, R. V., and Williams, C. A. . Employee reactions to corporate social responsibility: An organizational justice framework. Journal of Organizational Behavior, , –. *Rupp, D. E., Shao, R., Thornton, M. A., and Skarlicki, D. P. . Applicants and employees’ reactions to corporate social responsibility: The moderating effects of first party justice perceptions and moral identity. Personnel Psychology, , –. Rupp, D. E., Wright, P. M., Aryee, S., and Luo, Y. . Organizational justice, behavioral ethics, and corporate social responsibility: Finally the three shall merge. Management and Organization Review, , –.

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

 . 

Schwartz, A. . BP greenwashes post-Deepwater Horizon CSR report. Fast Company, Mar. . . Sen, S., Bhattacharya, C. B., and Korschun, D. . The role of corporate social responsibility in strengthening multiple stakeholder relationships: A field experiment. Journal of the Academy of Marketing Science, , –. Sheel, R. C., and Vohra, N. . Relationship between perceptions of corporate social responsibility and organizational cynicism: The role of employee volunteering. International Journal of Human Resource Management, , –. Shin, I., Hur, W-M., and Kang, S. . Employees’ perceptions of corporate social responsibility and job performance: A sequential mediation model. Sustainability, , . Singh, J., Sanchez, M., and del Bosque, I. R. . Understanding corporate social responsibility and product perceptions in consumer markets: A cross-cultural evaluation. Journal of Business Ethics, , –. *Skard, S., and Thorbjornsen, H. . Is publicity always better than advertising? The role of brand reputation in communicating corporate social responsibility. Journal of Business Ethics, , –. *Skarmeas, D., and Leonidou, C. N. . When consumers doubt, Watch out! The role of CSR skepticism. Journal of Business Research, , –. Stisser, P. . A deeper shade of green. American Demographics, , –. Tan, S. J., and Tan, K. L. . Antecedents and consequences of skepticism toward health claims: An empirical investigation of Singaporean consumers. Journal of Marketing Communications, , –. Tata, J., and Prasad, S. . CSR communication: An impression management perspective. Journal of Business Ethics, , –. TerraChoice . The Sins of Greenwashing Study . . Thorson, E., Page, T., and Moore, J. . Consumer response to four categories of “green” television commercials. Advances in Consumer Research, , –. Tian, Q., and Robertson, J. . How and when does perceived CSR affect employee engagement in voluntary pro-environmental behavior? Journal of Business Ethics, (), –. Turban, D. B., and Greening, D. W. . Corporate social performance and organizational attractiveness. Academy of Management Journal, , –. Van Dalen, A., Albaek, E., and de Vreese, C. . Suspicious minds: Explaining political cynicism among political journalists in Europe. European Journal of Communication, , –. Van Dolen, W. M., de Cremer, D., and de Ruyter, K. . Consumer cynicism toward collective buying: The interplay of others’ outcomes, social value orientation, and mood. Psychology and Marketing, , –. *Vanhamme, J., and Grobben, B. . “Too good to be true!”: The effectiveness of CSR history in countering negative publicity. Journal of Business Ethics, , –. Van Hoye, G., and Lievens, F. . Social influences on organizational attractiveness: Investigating if and when word-of-mouth matters. Journal of Applied Social Psychology, , –. Valentine, S., and Fleischman, G. . Ethics programs, perceived corporate social responsibility and job satisfaction. Journal of Business Ethics, , –. *Vlachos, P. A., Tsamakos, A., Vrechopoulos, A. P., and Avramidis, P. K. . Corporate social responsibility: Attributions, loyalty, and the mediating role of trust. Journal of the Academy of Marketing Sciences, , –.

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  



*Vlachos, P. A., Theotokis, A., and Panagopoulos, N. G. . Sales force reactions to corporate social responsibility: Attributions, outcomes, and the mediating role of trust. Industrial Marketing Management, , –. Vlachos, P. A., Panagopoulos, N. G., and Rapp, A. A. . Feeling good by doing good: Employee CSR-induced attributions, job satisfaction, and the role of charismatic leadership. Journal of Business Ethics, , –. Voliotis, S., Vlachos, P. A., and Epitropaki, O. . Perception-induced effects of corporate social irresponsibility (CSiR) for stereotypical and admired firms. In A. Glavas, C. R. Willness, and D. A. Jones (eds), Corporate Social Responsibility and Organizational Psychology: Quid Pro Quo, –. Lausanne: Frontiers Media. *Wagner, T., Lutz, R. J., and Weitz, B. A. . Corporate hypocrisy: Overcoming the threat of inconsistent corporate social responsibility perceptions. Journal of Marketing, , –. Waldman, D. A., Siegel, D., and Javidan, M. . Components of transformational leadership and corporate social responsibility. Journal of Management Studies, , –. Walker, K., and Wan, F. . The harm of symbolic actions and green-washing: Corporate actions and communications on environmental performance and their financial implications. Journal of Business Ethics, , –. Wan, L. C., Poon, P. S., and Yu, C. . Consumer reactions to corporate social responsibility brands: The role of face concern. Journal of Consumer Marketing, , –. Wanderley, L. S. O., Lucian, R., Farache, F., and de Sousa Filho, J. M. . CSR information disclosure on the web: A context-based approach analysing the influence of country of origin and industry sector. Journal of Business Ethics, , –. *Webb, D. J., and Mohr, L. A. . A typology of consumer responses to cause-related marketing: From skeptics to socially concerned. Journal of Public Policy and Marketing, , –. *West, B., Hillenbrand, C., and Money, K. . Building employee relationships through corporate social responsibility: The moderating role of social cynicism and reward for application. Group and Organization Management, , –. *White, K., and Willness, C. R. . Consumer reactions to the decrease-usage message: The role of elaborative processing. Journal of Consumer Psychology, , –. Willness, C. R., and Jones, D. A. . Corporate environmental sustainability and employee recruitment: Leveraging “green” business practices to attract talent. In A. H. Huffman and S. R. Klein (eds), Green Organizations: Driving Change with I-O Psychology, –. New York: Routledge Academic. Willness, C. R., and Jones, D. A. . Finding order in construct chaos: Clarifying and differentiating the ways stakeholders perceive and react to corporate social responsibility. Paper presented at the International Congress of Applied Psychology, Paris. Willness, C. R., and Jones, D. A. . Corporate social responsibility can attract job seekers . . . but can it also repel some of them? In K. Y. T. Yu (chair), Employer images and recruitment: Novel approaches for researchers and practitioners. th Annual Meeting of the Academy of Management, Vancouver, BC. Woodruff, J. . Why Starbucks is offering workers a college education, hold the debt. PBS Newshour, May . . Wu, M.-W., and Shen, C.-H. . Corporate social responsibility in the banking industry: Motives and financial performance. Journal of Banking and Finance, , –.

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 . 

*Yoon, Y., Gürhan-Canli, Z., and Schwarz, N. . The effect of corporate social responsibility activities on companies with bad reputations. Journal of Consumer Psychology, , –. Zerr, K. R., and Willness, C. R. . Exploring how employees develop perceptions of their organization’s environmental practices. In D. B. Ganegoda and D. A. Jones (co-chairs), Understanding employee responses to CSR: Explanatory mechanisms and boundary conditions. Presented at the th Annual Meeting of the Society for Industrial and Organizational Psychology, Oahu, HI.

OUP CORRECTED PROOF – FINAL, 13/9/2019, SPi

  ........................................................................................................................

ENVIRONMENT, SUSTAINABILITY ........................................................................................................................

OUP CORRECTED PROOF – FINAL, 13/9/2019, SPi

OUP CORRECTED PROOF – FINAL, 13/9/2019, SPi

  ......................................................................................................................

  Theoretical Perspective ......................................................................................................................

 ,  ,   

I

.................................................................................................................................. T discussion on corporate social responsibility (CSR) and its “financial cousin” (Heal, ), socially responsible investment (SRI), covers a broad range of topics in a diverse literature. Research on CSR and governance issues are published in the economic, finance, management/organization, and law literature. Studies focusing on the environment are mainly published in environmental, ecological, management/ organization, and economic journals, whereas research on social issues appears in psychological, management/organization, sociological, philosophical and economic journals. This scattered landscape is a curse and a blessing at the same time. To be sure, interdisciplinary work and a multi-lens view can provide valuable, new insights as well as a broad base of knowledge. However, at the same time the CSR literature can be overwhelming and at times even confusing. For example, when economists talk about “strategic” behavior, it is not the same as the term “strategy” that the management and organization literature has in mind. But it is not only the different terminology adopted in the various fields that warrant clarification; the fact that CSR is such an umbrella term is not always helpful. For example, the large empirical literature on the link between CSR and financial performance can appear somewhat clouded, as the mechanisms describing the various links between CSR performance and financial performance are either rather general or agnostically taken as such. In addition, it is hard to directly compare the amount of CO emissions with indicators of equal opportunities for employees, and at times

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

. , . ,  . 

difficult to identify what these have in common in affecting financial performance, for example. The lack of comparability of CSR indicators is ignored most of the time in empirical studies or paid lip-service only. The discussion thus remains in umbrella terms of costs and benefits. For this reason, in both empirical and theoretical work, researchers have also focused on one or a few dimensions of CSR. In many respects, the environmental dimension has a somewhat special role. First, in empirical work one could argue that environmental performance is (at least potentially) one of the better measured dimensions of CSR. Emission levels, waste reduction, and energy usage represent some of the more easily quantifiable indicators in the CSR spectrum, compared to the more opaque indicators of governance or social performance, such as “equal opportunities” or “ethical behavior in governance.” However, one should realize that CO emissions, hazardous material, and Joules cannot, in most cases, be put under the same heading. Second, in theoretical work, the environmental CSR literature can comfortably link to the field of environmental and resource economics. As such, some of the economic mechanisms and/or the strategic behavior of firms regarding environmental issues are more developed compared to some other dimensions of CSR. Environmental externalities, free-rider effects, private provision of public goods, green consumerism, voluntary over-compliance, corporate philanthropy, pro-environmental policy and competiveness, eco-labeling, and so forth, have been modeled and analyzed in great detail in this literature. Consequently, many policy implications in terms of, for example, taxes (Pigouvian tax, Lindahl prices) or proper definition of ownership (Coase Theorem) have emerged and found their way into business and society. Much of the theoretical work on environmental CSR links to this literature, but instead of relying on a role for the government to address environmental issues, it is investigated how the corporation could or should address them, either strategically or altruistically. In this chapter, we will review some of the theoretical literature on corporate environmental responsibility. Since the distinction between “pure” environmental economics and environmental responsibility is not always very clear, we settled on a number of criteria for research to be included in this review. First, besides focusing on environmental issues, the articles discussed should make a clear theoretical contribution. In this chapter, we exclude empirical work in which theories are borrowed and/or simply applied to empirical data. However, we include studies that present a theory which is subsequently utilized in an empirical application. Second, the mechanisms described to address environmental issues should rely on an interaction between the green preferences of consumers, employees, and/or shareholders and the firm only. That is, any resolving of environmental issues should be the result of either altruistic or strategic behavior on behalf of the firm—not related to government policy. As such, we offer a taxonomy of the theoretical literature on corporate environmental responsibility. We do realize that our choice of papers is selective and does not do justice to many of the great papers that meet these criteria. This is not an encompassing review of the literature, but a digestible reflection of it. Compared to other reviews on corporate environmental

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 



responsibility, e.g. Crifo and Sinclair-Desgagné (), we aim specifically to focus on theoretical advancements, highlighting influential contributions in the literature. We also devote a substantial part of the review to the theory behind environmentally responsible investing and its connection to environmental CSR, which have not, to our knowledge, been provided elsewhere. Regarding corporate environmental responsibility, we can distinguish between two levels of analysis: the micro- and the macro-perspective. The macro-perspective closely relates to the analysis found in the environmental and resource economics and the ecological economics literature. Here, the debate about responsibility connects with the notion of sustainable development (e.g. Barbier and Markandya, ) and usually includes policy analysis. We will give great detail on this literature as it is already wellestablished (see e.g. Lélé, , or Pearce and Warford, ). We primarily study the micro-economic perspective, which focuses on the responsible behavior of individual agents. This perspective investigates both markets and households. In the context of environmental responsibility, this is the analysis of socially responsible investing where investors screen financial assets on responsibility features. We will first differentiate between various types of behavior and motives. We end the chapter with a reflection on the theoretical literature about corporate environmental responsibility.

T M-E  C E R

.................................................................................................................................. In this section we provide an overview of the theoretically disposed literature on the mechanisms behind environmental responsibility. We start by describing CSR as a micro-economic theoretical construct in general. What can we find in the literature describing the main micro-economic drivers of CSR, which serves as a framework for so-called strategic CSR? The next section continues to describe the cost of capital, which is the vital link between so-called socially responsible/environmental investments and CSR responsibility. Before we discuss this literature, we want to highlight the rationale of corporate environmental responsibility. The main reason that it is being debated in the academic literature and in society is due to the fact that the environment is not (properly) priced and hence the actions of firms and household do not allow for a proper tradeoff between interests. In contrast to Crifo and SinclairDesgagné () some scholars do not think this mispricing boils down to preferences only. It also is a matter of sheer existence and is very material. An example is the tragedy of the commons which can ultimately result in the complete disappearance of species and habitats without us knowing what would be the long-term consequences of disappearance. Labeling this as a market imperfection or preference is an understatement. There is increasing scientific evidence that human activities have moved us beyond planetary limits (Rockström et al., ; Gaffney and Steffen, ). A new framing for this situation is the proposition that we are living in the Anthropocene.

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

. , . ,  . 

This term denotes an era in which “human actions have become the main driver of global environmental change” (Rockström et al., , ). Regardless of whether this proposition is sustained in a strict geological sense, the power of the idea of the Anthropocene is motivating and informing debates in many disciplines. Elevated and accelerating biodiversity loss in both terrestrial and marine ecosystems is one aspect of the changes observed. From an economic perspective, all types of firms and institutions are both ecologically and economically players in the Anthropocene. This implies that ecosystems can no longer be regarded as an externality to conventional production but that they are increasingly being shaped and threatened by human (in)action. Consequentially, one could argue that environmental responsibility goes beyond preferences, tastes and values only (Scholtens, )—yet such an approach is still underdeveloped and not universally acknowledged. While the notion of what constitutes social responsibility is to many intuitively clear, approaches differ in how to operationalize it as a theoretical construct. Baron () is an early theoretical paper on corporate social responsibility, in which he links corporate social responsibility to modern political theory and the role of civil society. In his view, redistribution by the firm induced by the market participants is simply profit maximization, or strategic CSR. Actions of the firm only deserve the label CSR if they are altruistic and go both beyond what is required by law and beyond what the market demands. This is very much in the spirit of the arguments raised by Friedman (), who also believes the label CSR is often superfluous and certain actions taken by the firm to improve their environmental performance can be justified on the grounds of being in the self-interest of the firm. For example, reducing energy usage may decrease CO emissions, but also lowers the energy bill. The notion of “doing well by doing good” would imply that such CSR simply constitutes business as usual. In sum, semantics do play a role in assessing whether or not a firm is being socially responsible, even in theoretical work. But the mere discussion about the correct definition of CSR does not lead to a fruitful debate. The arguments raised by Baron () and Friedman () are valid, yet many scholars do commonly settle on a definition of CSR that only requires the firm to take social or environmental actions that go beyond what is required by law—irrespective of whether the motivations are strategic (profit-maximizing) or altruistic. As outlined in the introduction, we feel that CSR is a convenient label for the collective academic work studying corporations that actively engage in voluntary over-compliance regarding environmental or social performance. The key feature of CSR in our discussion is that firms are not required to improve their social or environmental performance by the government or by law (see also Heal, ). Indeed, under this working definition, most theoretical work can be categorized as strategic-CSR literature (Kitzmueller and Shimshack, ). Altruistic CSR, i.e. when firms are “unwillingly taxing” market participants (Friedman, ), is in fact hard to maintain in competitive equilibria. If management is engaging in environmental activities at the expense of shareholders that disagree with these actions, the managers are likely to be replaced. At least, in theory; the primary way for board members to lose

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 



their job is to criticize the incumbent CEO (Zingales, ). Moreover, it is unlikely that a firm will survive in the market when it is engaging in additional costs to improve its environmental performance if no market participant (be it shareholder or consumer) is willing to bear those costs. A micro-economic view of (strategic) CSR thus boils down to describing the production possibility frontier and the allocation of costs and benefits. For a nontechnical, firm-level theoretical discussion on CSR in this vein; see McWilliams and Siegel (). Building on a similar cost-benefit framework, a formalized dynamic model of the firm is presented by Lundgren () where investments in CSR build a (intangible) goodwill stock. Since a firm that engages in CSR limits its set of activities (beyond what is required by law), the production possibility frontier shifts to lower levels of production under a set of available resources. This implies that CSR comes at a cost. In order for the firm to survive in competitive markets, some market participants should be willing to bear these costs (Kitzmueller and Shimshack, ). These participants appreciate CSR and, somehow, they trade off such CSR activities against other resources. For example, consumers may be willing to pay a premium price on “green” products, or socially responsible investors may require a lower rate of return on “green” investments. Of course, from an economic perspective, it is crucial that these firms are able to credibly signal the amount and type of “greenness” being generated in order to assess their performance (Scholtens, ). With this general framework in mind, much of the literature can be classified according to how the production frontier has shifted and/or which market participant is willing to bear the associated costs. Here we present a taxonomy based on Dam (), which is much in line with the classifications presented in Heal (). Much of the work on CSR fits in one of the categories to be outlined. However, admittedly, this micro-economic view does not always lend itself well to investigate all dimensions of CSR related to, for example, ethical behavior or corporate governance. These dimensions are studied more frequently in other disciplines, so by no means do we want to claim our taxonomy is exhaustive. Our taxonomy differentiates between managing costs and benefits, and/or risk and returns. To this extent, we discuss preempting future regulations, liability and reputation management, product differentiation and green consumerism, operations management, environmentally responsible investing, and intrinsic motivation.

P F R

.................................................................................................................................. Governmental regulations are not static and firms might have strategic reasons to preempt the introduction of new government regulation. They may also try to do their best to impact the regulation in order to protect or improve their profits (Zingales, ). Analyzing this second channel goes beyond the scope of this chapter though. In a model of (voluntary) pollution control, Maxwell et al. () discuss how an increased threat of government regulation induces firms voluntarily to reduce emissions

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

. , . ,  . 

before the new laws are actually passed. In their model, they show that, without voluntary control, the new regulation laws will potentially be stricter. Firms therefore have an incentive to restrain themselves or to self-regulate. In a real option framework, Lundgren () shows that voluntary investment in green technology is intensified when the threat of future regulation increases, a result similarly found by Giallonardo and Mulino () in a model of CSR and the role of credit constraints. Analogous to staying ahead of the competition, firms might want to stay ahead of the government. This relates to the interests of firms to keep their comparative advantage over (prospective) competitors. They can invest in R&D hoping this will result in the innovation of their products and processes. They also can take over (prospective) competitors. And/or they can try to influence government regulation that would impact on their advantage (Moe, ). This influence can go from lobbying and paying bribes to promising a future career to influential policy-makers to outright bribery (Zingales, ). By investing in environmental responsibility, firms in fact combine two strategies: innovating production and influencing policy. The latter is sometimes labeled in the economics literature as “regulatory capture” (see Stigler, , or Dal Bó, ). For a more detailed discussion about these aspects of CSR, see e.g. Kitzmueller and Shimshack ().

L  R M

.................................................................................................................................. Liability and reputation management, among other things, aims at preventing sudden large costs. Liabilities relate to the direct cost of harm done by the firm and the litigation that results from its actions, whereas reputation relates to the appreciation of the firm by its stakeholders. In this context, corporate social responsibility can be seen as a form of liability management to respond to environmental scandals, consumer boycotts, or lawsuits. It is also reputation management as firms compete with one another for interest of stakeholders; not only on the product markets, but also on factor markets. The liability/reputation issue and the connection to cost of capital is discussed—in varying degree of detail—in e.g. McWilliams and Siegel (), Heal (), Reinhardt et al. (), and Lundgren (). Environmental scandals, such as the BP Deepwater Horizon and the Volkswagen diesel case, illustrate that irresponsible behavior can cause the stock price of companies to drop suddenly and substantially. Similarly, not only investors can show their discontent with the conduct of the firm, but consumers as well, via boycotts. Consumers engage in boycotts quite frequently (see e.g. Friedman, ). One of the reasons for consumer boycotts is dissatisfaction with corporate policy after receiving information on how goods are produced. Finally, lawsuits such as those against the tobacco industry have shown that scandals not only hurt brand equity or share value but can induce large costs in the form of penalties.

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 



P D  G C

.................................................................................................................................. Product differentiation refers to the alteration of a product to gain market power in a niche market. With horizontal differentiation, goods and services are different but at the same price so some consumers will buy one and some will buy other, depending on preferences only. With vertical differentiation, goods and services are different and all consumers would prefer one to the other if they were sold at the same price. Vertical product differentiation is most often associated with producing similar goods with distinct qualities. Bjørner et al. () show that many consumers are willing to pay more (or buy more at the same price) for a product if it has been produced in an environmentally friendly way. Also, the market for “fair trade” goods is expanding. Importers of these goods certify that producers, often from developing countries, are given a “fair” wage and are working under decent conditions. This type of consumer demand creates niche markets. In many cases, certain socially responsible behavior is in fact a form of vertical product differentiation. However, there also is a risk here for the firms as the certification process and the qualification of “fair” requires information about the nature and impact of working conditions and production processes on social and environmental characteristics; these are not clear and the information is not independently audited and verified. Arora and Gangopadhyay () is an early theoretical paper on (green) product differentiation. They explain why some firms voluntarily over-comply with environmental regulation in a model where all consumers value environmental quality but differ in their willingness to pay which depends on their income levels. Firms play a two-stage duopoly game where they first select their levels of greenness and next engage in price competition in a market segmented by income levels. It is shown that a minimum standard binding on the dirtier firm has the effect of improving the performance of the cleaner firm. More recent, but similar, analyses can be found in e.g. Liu et al. () and Lambertini and Tampieri (). Eriksson () models product differentiation in a market with green consumers, assuming that consumers are willing to pay a premium for a good if it has a low impact on the environment. The impact of such idealistic behavior on the market equilibrium is assessed and to what extent it can replace the environmental regulation. Consumers’ willingness to pay the environmental premium may be uniformly or non-uniformly distributed. Eriksson () finds that green consumerism will only be moderately influential in both cases, despite the fact that product differentiation leads to relaxed competition and increased profits. Giallonardo and Mulino () set out a model of strategic CSR with consumers’ demand for CSR products, where ethical or green characteristics improve the “quality” of goods through a complementarity between production and CSR provision. The model assumes heterogeneous firms in monopolistic competition with social attribute

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

. , . ,  . 

product differentiation. They also specifically consider the role of external financing and find that credit constraints may lead active firms to reduce CSR levels in optimum, a result that is novel compared to earlier product differentiation models. In addition policy interventions may lead to a higher level of CSR, similar to a result also found by Lundgren (). Linking specifically to the literature on private provision of public goods, Besley and Ghatak () and Kotchen () model CSR behavior using a framework where the consumer can choose between a clean and conventional/neutral alternative. Besley and Ghatak () show that CSR can be consistent with profitmaximization in competitive markets. Firms sell clean brands and neutral brands, and consumers self-select according to their valuation of the public good. In their setting, it is shown that CSR can be Pareto-sanctioned. Further, they show that CSR will be at the same level as the (well-known) voluntary contributions equilibrium for public goods, and hence always leads to a sub-optimal (excessive) level of public goods. With a similar model framework, Kotchen () shows that, under reasonable conditions, green markets/consumers can have beneficial or detrimental effects on environmental quality and social welfare in equilibrium. Both of these studies relate back to Bergstrom et al. () who propose a theory of private provision of public goods. In a firm-level setting, Lundgren (, ) and Kriström and Lundgren () suggest a model framework where firms can create a stock of (intangible) green goodwill through investment in CSR. The stock of green goodwill acts on components in revenues and costs of the firm, such as price/quantity, productivity of workers, and cost of capital. These models explicitly take dynamics into account and the modeling framework can be traced back to early dynamic advertising models (see e.g. Nerlove and Arrow, ). Dynamics are a vital component of environmental responsibility as reputation building is a crucial part of the CSR concept. Lundgren () shows that, in equilibrium, costs and benefits must be balanced and a steady-state level of a CSR or green goodwill stock can exist. A similar dynamic approach using the concept of “ethical capital,” but that also adds strategic interactions between firms, can be found in Wirl et al. (), Wirl (), and Becchetti et al. (). A noteworthy result from Wirl () is that CSR can be contagious; once the competitive race is triggered, the model predicts a fast and wide evolution of CSR, which at least anecdotal evidence from real-world observation seems to confirm, for example, in the food industry. The micro-level, theoretical work on CSR and environmental responsibility is to a large degree, not surprisingly, found in the product differentiation/green consumerism category in our taxonomy. Firms use environmental CSR to position themselves on a market which rewards green behavior. The models which include both dynamics and strategic behavior are especially interesting since they can convey much of the main characteristics and components of the phenomena of environmental responsibility and can help explain its development.

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 



O M

.................................................................................................................................. Operations management is about the position of the firm on or below the efficient production frontier and about how to shift or move towards the production possibility frontier. As with labor and capital, natural resources too face inefficiencies. These are exacerbated by the inappropriate valuation and pricing of these natural resources. Then, firms can try to obtain a relative advantage by more efficiently combining and managing production factors than their competitors do (e.g. Porter and van der Linde, ; Hart, ). Less pollution and better resource use help firms to save control costs, reduce input and energy consumption, and also reuse materials (Hart, ). However, these investments are costly in terms of facility costs and opportunity costs (Walley and Whitehead, ) and thus might reduce profits. Schaltegger introduced the concept of eco-efficiency (see e.g. Möller and Schaltegger, ). It is usually expressed as the ratio of product value divided by its environmental burden. This ratio is also called environmental productivity or incremental ecoefficiency in Huppes and Ishikawa (). To increase eco-efficiency, one should reduce the environmental impact of the product or increase its economic value. The idea behind eco-efficiency is to maximize the economic value of the product while minimizing its environmental impact (use of resources and emissions). The ecoefficiency concept is also used in production economics models; see e.g. Kuosmanen and Kortelainen (). In addition a vast number studies in applied and theoretical production economics use frontier methods to measure environmental performance/ efficiency (see reviews in Bostian et al., ; Førsund, )—a similar concept as ecoefficiency—and other performance measures connected to energy consumption. These models mainly utilize data envelopment analysis (DEA) or less frequently also stochastic frontier analysis (SFA). For a review on DEA-models and their use in both energy and environment studies, see Zhou et al. (). This line of research relates the production of good outputs to the by-production of bad outputs (e.g. emissions) and energy use through an environmental technology using (directional) distance functions, and the objective is to maximize good production while minimizing bad output or energy consumption given an input set. The models are consistent with economic production theory. The uses of the production theoretic approach in a CSR context are rare but a few applications can be found in the literature; see e.g. Färe et al. (), Becchetti et al. (), Becchetti and Trovato (), Lundgren and Marklund (), Chambers and Serra (), Bostian et al. (a, b), and Lundgren and Wenchao (). A potential problem in general with constructing eco-efficiency type of indicators is that there is a lack of agreed rules or standards for recognition, measurement, and disclosure of environmental information. Further, for some eco-efficiency indicators a problem is that environmental issues lack a common denominator, like money which is the main dimension in economics. Therefore, the commensurability (relating emissions, resource scarcity, ecosystem vulnerability, biodiversity to each other) is problematic

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

. , . ,  . 

and impacts dimensioning the efficient frontier. However, using the production theoretic approach as described in Bostian et al. () or Kuosmanen and Kortelainen () does not suffer from the lack-of-common-denominator problem. This approach allows the researcher to mix whatever units the variables are measured in, and there is no need to have a priori assumptions on the weights of the calculated index, since these weights are optimized in the estimation. For example, in an environmental performance index you could e.g. have a variable reflecting real output (an index in monetary units), CO emissions in tons of carbon, and release of toxins into water and the terrestrial in grams of various toxins (or in whatever unit you want to measure them); such an index would still be independent of the choice of units. The line of research described in this section that uses a production theoretic base for its analysis is promising. Measurement and evaluation of environmental performance is genuinely rooted in economic theory and the methods duly recognize the tradeoffs between different input uses and the opportunity cost of CSR. The models are able to derive performance indexes that incorporate thirteen multiple bad/good outputs in a consistent manner. Combined with high-quality data these models are potentially very useful and can cast light on a firm’s economic, environmental, and energy performances and their interactions (for a recent example, see Lundgren and Wenchao, ).

E R I

.................................................................................................................................. Within environmental responsibility, the literature on socially responsible investments warrants some special and elaborate attention. In many (micro-economic) models, it is implicitly assumed that management of the firm is directly conducted by its owners (as in, Baron, ). In this case corporate environmental responsibility translates directly to responsible investment; investor’s green preferences are implied. An interpretation of these models is thus that responsible investment is the latent driver of corporate social responsibility. On financial markets, the resulting claims (i.e. financial assets like stocks and bonds) are traded by financial market participants. According to the US SIF Foundation’s  Report on Sustainable and Responsible Investing Trends in the United States, more than one out of every five dollars under professional management in the United States was subject to some form of environmental or social screening. Within Europe, this fraction is even larger; Eurosif () guesstimates that two out of every five euros under professional management is somehow related to responsible investing. Therefore, it is clear that some shareholders not only care about their stock returns, but also about how these returns are generated. Bénabou and Tirole () explain why this might be the case. Rating agencies, such as Kinder Lydenburg Domini (KLD), have come up with a large list of issues they consider when assessing corporate social responsible conduct. For example, MSCI KLD analyzes charitable giving, relations with indigenous people, the compensation

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

of top management, employment of women, minorities, and disabled, the retirement benefit program, the firm’s liabilities for hazardous waste, use of recycled materials and alternative fuels, etc. Company scores on these issues are then taken into account when shareholders construct and manage their portfolios. Mattingly and Berman () find that positive performance of firms closely correlates with negative performance on corporate social responsible conduct. Investors may screen for some or all of these attributes when deciding about their investment universe. By limiting the set of available investment opportunities, socially responsible investors seem to be implicitly willing to accept a lower rate of return. This mechanism is theoretically addressed in, for example, Dam and Scholtens (). The screening can lead to exclusion or to overweighting and underweighting of particular firms, countries, and industries in the investment portfolio. They can also enter into a dialogue with the board of the firms they invest in or file petitions/vote on the AGM. The latter is responsible activism. Some of the literature explicitly addresses investor preferences behind socially responsible investment, though much of this work is buried in the broader research agenda on the link between environmental and financial performance (see e.g. Margolis et al., ). In this sense, it is not always clear whether this literature tries to identify investor’s environmental preferences or simply tries to relate environmental responsibility in general to financial performance measures. Research on socially responsible investment behavior is only slowly penetrating mainstream finance journals, yet mostly in empirical work. A generally accepted approach is to test the risk-adjusted performance of particular portfolio management strategies, by running time-series regressions of portfolio returns of long-short positions, or portfolio sorts, based on some social or environmental dimension on common risk factors (see e.g. Renneboog et al., ; Galema et al., ; Bauer et al., , , ; Bechetti et al., ; de Haan et al., ; Derwall et al., ). The common risk factors are, for example, identified in the Fama and French three-factor model (Fama and French, ), or Carhart’s four-factor model (Carhart, ). A relatively early and widely cited study that takes such an approach is Hong and Kacperczyk (), who document that so-called “sin stocks”, belonging to e.g. the tobacco, alcohol, or firearms industrie,s earn an abnormal return of about . percent annually. The theoretical rationale is that a significant group of investors “screen” certain stocks out of their portfolio based on considerations other than risk and return, leading to higher riskadjusted returns for sin stocks in equilibrium. Similarly, it is theoretically argued that irresponsible firms should earn a higher risk-adjusted return in equilibrium (Hong and Kacperczyk, ). There is a strand of literature that tries to explicitly model socially responsible investment, though. Heinkel et al. () theoretically investigate the effect of green screening on portfolios selection. They simply assume that there are two groups of investors, a group of regular investors and a group that only wants to invest in green assets. The green investors refrain from investing in controversial companies and as such restrict demand for their assets. At the same time, they reduce the diversification opportunities for the regular investors as these will have to finance the controversial

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

. , . ,  . 

firms. Heinkel et al. () argue that when the fraction of green investors is large enough, this can impact the return of the green and of the controversial assets. When the fraction increases further, it might increase the cost of capital of the controversial firms and even crowd out their technology. Then, it might be more efficient for such firms to switch to becoming green. The investors in controversial assets will require more and more compensation for these increasingly risky assets when the fraction of green investors keeps rising. Technically, the mechanism is identical to that in Merton (), who proposes a model of limited information, where some groups of investors simply do not invest in certain stocks because they do not know about it. The qualitative effect of such screening is similar in both papers. The group of investors that actively screens is limiting their portfolio diversification potential and does not hold portfolios with an optimal Sharpe ratio. In the aggregate, the drop in demand of assets that are screened out causes a return premium on these assets. Mackey et al. () take a similar approach. More explicit preferences for environmental socially responsible investment in a static portfolio selection model are used in Dam and Scholtens (). They adopt the concept of a “warm glow” in green consumerism from Andreoni (). In particular, in their approach, there are several investors with individual preferences for a “good” and a “bad” which are represented by an investor-specific utility function. The utility function depends on consumption and the total environmental damage caused by the firms the consumer holds shares in. Investors experience a “warm glow” from not contributing to total social damages, as argued in Andreoni (). Socially responsible investment is modeled by assuming that the investor feels responsible for a part of the environmental damage produced by the firms in which she holds shares. Each investor chooses a portfolio of bonds and shares in various firms. By reformulating the investorspecific first-order condition resulting from the expected utility maximization problem, an equilibrium pricing equation closely resembling the Capital Asset Pricing Model (CAPM) is found. This equation shows that the expected return on an asset is equal to the risk-free rate, plus a risk premium that comprises a measure of systematic risk (beta) times the market risk premium, and an additional term due to socially responsible investment behavior. The risk-adjusted return consists of the average preference for environmental damage times the environmental damage of a firm scaled by the share price of that firm. In effect, firms that pollute more earn a return premium, and it is the average preference of investors for environmental damage that determines this premium. The above-mentioned equation is thus the CAPM with an additional term reflecting environmentally responsible investment, and Heinkel et al. () is a special case with a dichotomous subjective marginal rate of substitution between environmental damage and consumption. Environmentally irresponsible firms require a risk-adjusted return premium relative to responsible firms for the average investor to be willing to hold the market portfolio. Dam and Scholtens () also show that when investors have green preferences, maximizing firm value is no longer the same as maximizing firm profits, since the

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

value of the firm is affected by the green preferences. If one adopts the definition of Heal () of CSR, namely that firms internalize external costs, it implies that socially responsible firms maximize firm value, while irresponsible firms maximize firm profits. The same “warm-glow” approach has been used in a dynamic macro-economic setting in Dam (), and Dam and Heijdra (). Dam () applies the SRI preferences in a non-stochastic dynamic macro-economic model with overlapping generation and an environmental stock. Typically, short-lived agents do not account for the effects of long-term pollution, but in the presence of an infinitely lived stock market, green investor preferences can resolve the intergenerational conflict. Dam and Heijdra () study the effects of socially responsible investment in a non-stochastic dynamic macro-economic model with an environmental stock. They study the interaction between abatement, green preferences, and government taxation. Their paper shows that there can exist adverse effects of taxing pollution, since it crowds out the implicit tax induced by socially responsible investment. We like to point out a number of misconceptions about the equilibrium pricing equation of returns in the presence of socially responsible investors. First, it may appear that regular investors, i.e. investors who do not care about the environment, are presented with an arbitrage opportunity, because of the return premium on irresponsible firms. Could they not go short in responsible firms and long in irresponsible firms with similar risk profiles and collect the difference? No; this assessment is false. In short, the market is in equilibrium and no gains of trade are possible—large shifts in demand would also change the equilibrium betas. Second, the key thing to realize is that the market portfolio itself is no longer mean-variance efficient. Regular investors will hold a mean-variance efficient portfolio, but environmentally responsible investors will not. In the aggregate, it means that the market portfolio is not mean-variance efficient, and therefore the stochastic discount factor is no longer linear in the returns on the market portfolio. However, there exists a different portfolio, or equivalently, a different implied covariance matrix, such that the classic return–beta relationship holds. The only reason for investors to take the aforementioned long-short positions is when, instead of being neutral, they actually have a preference for environmental pollution, and are willing to forego diversification/mean-variance benefits to enjoy pollution—which is unlikely. Of course, when there are two assets that are perfectly correlated and exhibit a return difference, then arbitrage arguments would cancel the return difference. However, even in the conventional setup without responsible investing, this situation leads to indeterminacy, as the covariance matrix is no longer invertible. In sum, a return premium is not incompatible with market equilibrium or no-arbitrage conditions. The aforementioned type of theoretical modeling of preferences over assets based on characteristics other than risk and expected return is still considered non-standard or even unconventional. But now that, in practice, between  and  percent of assets under professional management are subject to some form of screening regarding CSR (Eurosif, ), this attitude is changing. Even renowned mainstream finance scholars

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

. , . ,  . 

Fama and French have suggested that there could exist “taste for assets” (Fama and French, ). Then, one would expect that the theoretical literature on green consumerism could be easily translated to capital markets. But there are a number of caveats. First, implementation of environmental preferences introduces the same free-rider problem as in the consumer market. Since each investor is non-pivotal regarding provision of the public good, the environment, an individual investor will not take the impact of his decisions on all other investors into account. So even if investors do have green preferences, these still could have no impact on their investment decisions. Moreover, while the consumption of a good can directly be linked to the environmental pollution associated with the production of the good, the mechanism that should link the purchase of shares of equity of a firm to its polluting production is rather indirect. In any case, it is not so obvious why rational investors, even if they have green preferences, should automatically incorporate green characteristics of firms in their investment decisions. A certain technicality also distinguishes the modeling of green preferences in capital markets from the consumer market. Cash flows generated by investment decisions are considered perfect substitutes, whereas it is commonly more acceptable that various goods in consumer markets are not perfect substitutes. While this detail seems innocuous, it potentially obfuscates the modeling of a green investor market. Suppose there are two assets, each promising a risk-free payoff. If there is not some mechanism introduced other than imperfect substitution to “smooth” the demand functions, in equilibrium rates of return need to be the same to avoid bang-bang solutions, however, once they are equalized, the demand for each asset becomes indeterminate. In this case, one could model the supply side as well, but this already adds complexity to such a model. A different and natural way to smooth demand functions in capital markets is of course to add uncertainty. But once green preferences are added in a stochastic setting, one needs to identify whether demand for an asset is driven by its diversification advantages or its green properties. This is of course possible, but our discussion illustrates that the adoption of models on green consumerism in investor markets is not straightforward. While the models mentioned assume a pure “taste” effect in socially responsible investing, some of the debate in the empirical literature revolves around risk versus taste effects. The argument is that any risk-adjusted abnormal return could also come from an omitted risk factor. For example, environmental scandals or consumer boycotts can cause a sudden drop in the share price of a firm (e.g. Capelle-Blancard and Laguna, ). It might be that such stakeholder risks are not well captured by the commonly used risk factors, like the market movement in general, firm size, firm leverage, momentum, etc. (Fama and French, , ). In this view, differences in expected return are not due to a preference for the environment, but simply fit in the risk–expected return framework. The key is to measure the CSR-risk factor properly to disentangle risk from taste, and some empirical research indeed takes this approach (see e.g. Bechetti et al., ; Ciciretti et al., ; de Haan et al., ). However, to our knowledge there are no theoretical micro-economic models that explicitly tie risk characteristics to environmental responsibility.

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

I M

.................................................................................................................................. Finally, managers might have their own moral obligations against certain ways of doing business. This intrinsic motivation is the “altruistic” CSR described by Baron (). A commonly mentioned example of such a manager was Ray Anderson, former founder and chairman of Interface, a manufacturer of modular carpet for commercial and residential applications. Anderson was known for his progressive stance on corporate social responsibility. If firm leadership and owners disagree on how CSR is conducted, we may have a principal-agent problem (which comes from agency theory). The principal-agent problem that may arise when altruistic CSR is pursued by intrinsically motivated managers and was raised by Friedman () and discussed in e.g. Falck and Heblick (). For a general account of the economics of the principal-agent relationship, see Stiglitz ().

C

.................................................................................................................................. The literature about corporate social responsibility is highly empirically driven and still seems “data in search of a theory.” We think this is somewhat ironic as the quality of the information about CSR is poor, to say the least. So far, there is little theory about why corporate social responsibility would emerge and evolve. This chapter focuses on the notions that are put forward in this respect. We provide a taxonomy to bring the bits and pieces of theoretical thought together. We do not aim here to build theory; we do not aim to provide a complete overview and assessment. In this chapter we distinguish between the micro and the macro perspective. We feel that only the macro-perspective is—at this stage—relatively well connected with the economic theories and toolbox, namely along the lines of environmental and resources economics, and ecological economics. The micro-attempts to model CSR have progressed but appear not to have resulted in a grounding and unified framework as of yet. But we see some promising developments, especially in terms of dealing with dynamics and strategic interaction between firms, and measuring CSR and environmental performance based on a production theoretic framework. We argue that a theory about CSR (or corporate environmental responsibility, CER) would have to balance between personal taste and values, social norms, market imperfections and—arguably—the Anthropocene perspective. An essential ingredient of advancing academic research about CSR-CER would be improving environmental accounting frameworks—both on the firm and national level—and insights in the impact of the interaction between the economy and the environment. Paul and Siegel (), in a theme issue on CSR and economic performance, emphasize that what is essential to study, theoretically or empirically, is how actual environmental actions are linked to the economics of the firm. They note that the vast number of studies on CSR

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

. , . ,  . 

rankings/scores and the effect on financial measures is, from an economic perspective, unfortunate. A more salient issue is the relationship between actual environmental performance and economic performance, where economic performance entails technological and economic interactions between the production of output and input utilization, recognizing the opportunity costs of CSR, inputs, and capital formation. Thus, the system of double bookkeeping and national accounting needs to be accompanied by environmental, social, and material flows accounts in a more detailed manner than what we see today. Otherwise, any theory about CSR-CER would run the risk of remaining sterile as it would be impossible to put it to the test.

R Andreoni, J. . Impure altruism and donations to public goods: A theory of warm-glow giving. Economic Journal, , –. Arora, S., and Gangopadhyay, S. . Toward a theoretical model of voluntary over-compliance. Journal of Economic Behavior and Organization, , –. Barbier, E. B., and Markandya, A. . A New Blueprint for a Green Economy. London: Routledge/Taylor & Francis. Baron, D. . Private politics, corporate social responsibility and integrated strategy. Journal of Economics and Management Strategy, , –. Bauer, R., Koedijk, K., and Otten, R. . International evidence on ethical mutual fund performance and investment style. Journal of Banking and Finance, , –. Bauer, R., Otten, R., and Rad, A. . Ethical investing in Australia: Is there a financial penalty? Pacific-Basin Finance Journal, , –. Bauer, R., Derwall, J., and Otten, R. . The ethical mutual fund performance debate: New evidence from Canada. Journal of Business Ethics, , –. Becchetti, L., and Trovato, G. . Corporate social responsibility and firm efficiency: A latent class stochastic frontier analysis. Journal of Productivity Analysis, , –. Becchetti, L., Di Giacomo, S., and Pinnacchio, D. . The impact of social responsibility on productivity and efficiency of US listed companies. Applied Economics, , –. Becchetti, L., Palestini, A., Solferino, N., and Tessitore, M. . The socially responsible choice in a duopolistic market: A dynamic model of “ethical product” differentiation. Economic Modelling, , –. Becchetti, L., Ciciretti, R., and Dalò, A. . Fishing the Corporate Social Responsibility Risk Factors. CEIS working paper . Tor Vergata, Rome: CEIS. Bénabou, R., and Tirole, J. . Individual and corporate social responsibility. Economica, , –. Bergstrom, T. C., Blume, L., and Varian, H. . On the private provision of public goods. Journal of Public Economics, , –. Besley, T., and Ghatak, M. . Retailing public goods: The economics of corporate social responsibility. Journal of Public Economics, , –. Bjørner, T. B., Hansen, L. L. G., and Russell, C. S. . Environmental labelling and consumers’ choice: An empirical analysis of the effect of the Nordic Swan. Journal of Environmental Economics and Management, , –. Bostian, M., Färe, R., Grosskopf, S., and Lundgren, T. a. Environmental investment and firm performance: A network approach. Energy Economics, , –.

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 



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. , . ,  . 

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

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. , . ,  . 

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  ......................................................................................................................

    Concepts, Intersections, and Limitations ......................................................................................................................

 

I

.................................................................................................................................. T interface between CSR and environmental law is extensive in terms of both substantive concerns and regulatory approaches. Substantively, CSR and environmental law share a focus on the natural environment and certain principles. From a regulatory perspective both use a variety of voluntary, self-regulatory, and co-regulatory structures, principle-based approaches, and emphasize regulation by information disclosure. They operate, however, on markedly different premises and as a result deliver markedly different results. CSR works on the assumption that there are significant market drivers or potential substantial financial incentives which would promote environmental investment. It assumes that there is a sufficiently strong moral imperative to move businesses toward adopting increasingly stringent environmental standards. By way of contrast, environmental law, as public law, makes no such assumptions. Environmental law operates on the premises of broad public good with actors expected to be motivated by and respond to the threat of force. Its sole assumption is that firms will comply with mandated standards, failing which, they can expect to be penalized through the courts. Nevertheless, each of these phenomena, CSR and environmental law, has different contributions to make in improving the environmental performance of businesses. The chapter proceeds as follows: the next section is a consideration of whether CSR includes an environmental obligation. That section is followed by an analysis of the bases for asserting that CSR holds an environmental obligation. Having examined CSR and environmental obligations, the chapter then addresses environmental law. It next brings the two concepts together to investigate how they interact. It ends with an evaluation of CSR in terms of environmental performance.

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

 

D CSR I E R?

.................................................................................................................................. The basic question is whether CSR imposes any obligation on business toward the natural environment. Although today CSR is properly defined as “international private business self-regulation” based on international norms which include the environment (Sheehy, ), it was not always so. In fact, the question of CSR obligation to the environment has only emerged relatively recently in CSR thinking. Early CSR discussion focused on directors’ duties, as the title of a leading Harvard Law Review article “For whom are corporate managers trustees?” (Dodd, ) indicates. In early CSR the object of the duty was one or more of shareholders, the corporate entity, employees, or the community (Sommer, ). Consideration of the natural environment was simply not part of the discussion. Over the years, however, this position has changed as a result of two discrete drivers and their related framings. These were: environmental disasters and the business case for investment in environmental performance. As a result of repeated environmental disasters caused by businesses, scholars and executives started to pay particular attention to the environmental dimensions of CSR (Orts, ). The historical series of well-known major incidents included the following: on July ,  a small dioxin cloud escaped from a chemical plant in an Italian town close to Milan. Known as the Seveso disaster, the industrial accident caused direct injuries to  people and led to the slaughter of tens of thousands of contaminated animals (Adeola, ). A second major event attracting public attention to industrial contamination of the environment was the Love Canal. In that case a former chemical factory site was converted into a housing development in the US state of New York. The land was contaminated by the prior industrial activity which, although initially buried, began to leach and spread across the housing estate (Brown, ). This contamination, exposed publicly in , led to hundreds of people becoming seriously ill and became a significant turning point for corporate environmental activism (Newman, ). A subsequent and third event in India captured global attention in . The negligence of Union Carbide in Bhopal resulted in the release of poisonous gases which led to at least , deaths, a settlement payment by the Indian government to victims of $ million (Broughton, ), and to more than , injuries (Bhopal, ; Eckerman, ). Yet perhaps the environmental event which had the greatest impact on CSR, directing it toward environmental matters was the Exxon Valdez incident. On the evening of March , , disaster struck the oil tanker Exxon Valdez on its route along the northwest coast of North America. The accident spilled hundreds of thousands of barrels of crude oil into the ocean, contaminated a , mile stretch of formerly pristine coastline and took more than four years to clean up (Exxon-Valdez Oil Spill Trustee Council, n.d.). This particular incident, combined with the widely publicized earlier disasters, served as a turning point bringing widespread political and

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   



business attention to the environment. It led, among other things, to the development of the Valdez Principles, later renamed the CERES Principles, which were to become a model in both substance and form for subsequent corporate environmentalism, namely, a privately drafted set of norms to be adopted voluntarily which rely on a public information disclosure strategy for enforcement (Pink, ). They became a benchmark for CSR and the environment. The CERES Principles are: . . . . . . . . . .

Protection of the biosphere Sustainable use of natural resources Reduction and disposal of wastes Energy conservation Risk reduction Safe products and services Environmental restoration Informing the public Management commitment Audits and reports

Subsequently, CERES, originally an acronym for the organization, Coalition for Environmentally Responsible EconomieS, joined with another body, and with the support of the United Nations Environmental Program, launched the Global Reporting Initiative (GRI) in . The GRI has become the de facto global standard for sustainability reporting. Any company seeking to make a credible claim to CSR must include some form of sustainability reporting. So, from a private sector perspective, CSR came to include a focus on the natural environment combined with a public environmental reporting function. In the same era the United Nations was acting at the global level on environmental issues. In , acknowledging the serious environmental degradation around the planet resulting from economic development, the UN passed a resolution to create a World Commission on Environment and Development. The Commission’s first report, Our Common Future, commonly known as the “Brundtland Report,” identified among other things the role of business in environmental harms. This identification was specifically aligned to the mandate: “to raise the level of understanding and commitment to action on the part of . . . businesses” (World Commission on Environment and Development, , ). Accordingly, the Brundtland Report, which defined and popularized the term “sustainable development,” added further pressure on business to accept responsibility for environmental impacts. Indeed it is fair to say that a sense of business responsibility for environmental impacts became the norm at the global level because of the Brundtland Report. The follow-up report, Agenda  of the  Rio Earth Summit, declares: “Business and industry should increase self-regulation, guided by appropriate codes, charters and initiatives integrated into all elements of business planning and decision-making, and

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

 

fostering openness and dialogue with employees and the public” (United Nations Division for Sustainable Development, ). This report, building on Brundtland, identifies a set of preferred regulatory approaches including self-regulation, regulation by information, and stakeholder engagement, all similar to the regulatory preferences set out in the private sector’s CERES Principles. As the concept of corporate responsibility developed within the UN system, the idea of coordinating business engagement with the sustainable development agenda took hold. This led the then UN Secretary General, Kofi Annan, to establish the United Nations Global Compact (UNGC) in . The UNGC is a UN organization that “promotes responsible business practices and UN values among the global business community and the UN System” (United Nations, ). The UNGC specifically contains by reference a number of international treaties and conventions. In terms of the natural environment, the UNGC directly links to Agenda  and identifies a number of specific obligations on business in its Principles , , and . In other words, from at least  when Agenda  was declared, CSR included environmental responsibilities at the international level. In summary, it is clear that CSR does impose environmental obligations on firms. Although early forms of CSR did not address the environment, as the idea of CSR evolved, the impacts on the environment became clear, and the scope of industrial accidents increased, CSR soft law norms extended to explicitly include a responsibility on business for environmental consequences. In concert with these international soft law developments, in the domains of private corporate internal policy and public environmental law things were developing rapidly.

U CSR  C E

.................................................................................................................................. CSR’s shift to include a responsibility for the environment led to the rise of “corporate environmentalism”—a firm-level emphasis on activities and policies addressing the environmental concerns. A starting point for understanding corporate environmentalism is a brief examination of motives for the activity. A range of academic disciplines have examined them but particularly enlightening ones come from political science, business studies, and business ethics.

Social License Analysis An important theory used to examine and explain CSR is drawn from the political science approach of legitimacy theory (Suchman, ). This theory is used to analyze CSR as a strategy for organizations to gain legitimacy (Garriga and Melé, ; Sheehy, ). Legitimacy theory both underpins and is exemplified in the broad “social license”

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discussion in CSR. The leading analyst in corporate environmentalism using the license framework is Neil Gunningham. Gunningham’s empirically based analysis suggests that the interaction between corporate environmental responsibility and environmental law can be best explained by a disaggregation and use of a tripartite license concept (Gunningham, ). The three licenses required to operate, argues Gunningham, are legal, economic, and social. Briefly these are the basic legal requirements for setting up and operating a business, the economic license or necessity of generating an appropriate return on capital, and the social license or public goodwill necessary to continue operations without disruption. Gunningham states that the relationships between the licensors and the licensees is a complex bi-directional relationship and that the impacts grow as the three licenses interact. For example, legal license may expand the social license by the creation of legislated right to information to giving legal clout to the moral “public right to know.” With society monitoring business environmental performance, firms become more conscious about complying with the letter and spirit of the law. In a similar vein, social license can expand legal license. Where an organization or industry fails to take sufficient account of societal concerns, pressure builds on regulators and politicians, giving them social license to take legislative action. This interaction leads businesses to take a “beyond compliance” approach toward environmental issues (Gunningham, ). This dynamic takes place at both a firm and an industry level. At an industry level, Gunningham focuses on the significant presence of industry associations. These associations, he notes, are motivated by a drive to avoid expanding legal license on the one hand and a drive to maintain social license on the other (Gunningham, ). Industry associations solve a collective action problem where individual businesses can become subsumed by the industry as a whole. As a result, actions by individual companies in response to societal concerns will be ineffective in addressing the license issues. The industry associations operate by creating norms, institutionalizing them through their industry peer networks, providing technical assistance to members, and disclosing data publicly on performance. Despite their strategic aim to ward off more intrusive and stricter legislation, they operate “in the shadow of the law”—i.e. the law towers above, threatening intervention should the industries fail to control their own environmental performance. Gunningham argues that such voluntary regulations are indeed effective, not only in avoiding further regulation, but in fact in reducing environmental harms. Indeed, some argue that the existence and participation in these private voluntary regimes create direct public legal obligations (Brown, ; Gunningham, ; Pitts, a). While the social license perspective looks at a range of social and political motives, the analysis of business economists focuses on finance.

Business Economic Perspective Business economics examines corporate environmentalism in terms of costs and benefits, strategy, efficiency, and shareholder wealth. It utilizes two core concepts.

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First, sustainability in an economic lens is simply the maintenance of wealth. Thus, for development to be sustainable, natural environmental capital should not be depleted at a rate in excess of the creation of new human or other capital (Reinhardt, ). Second, in economic terms, corporate environmentalism is a voluntary transfer of private firm wealth to the public (Reinhardt, ). These two core concepts are argued on two distinct bases, namely, economic and ethical. Following the economic vein or the “business case” as it is called, the legitimacy and value of investment in corporate environmentalism must be justified against shareholder value. The issue can be framed normatively or positively, whether business ought to or does invest in sustainability in the belief that such investment contributes to the bottom line. In common parlance, this cost-benefit analysis is summed up in the statement “it pays to be green.” As Harvard business scholar, Forest Reinhardt, points out, if it were possible to answer the question positively, unequivocally, and across the board, there would be no need for discussion of corporate environmentalism. It would simply be a rational efficient use of funds. Accordingly, Reinhardt turns the discussion to whether and when an investment which may be a transfer of wealth from the firm, to the public whether for wages, supplies, or improved environmental performance, is justifiable and efficient. Reinhardt offers the caveat that while a return to the firm is always contingent there needs to be a reasonable probability of the return. The business analysis suggests that for green environmental policies to pay, certain conditions must prevail. These conditions are any one or more of the following: purchasers must be willing to pay a premium, the investment must reduce costs, or offer improved risk management (Reinhardt, ). Problematically, it is unclear when those conditions prevail and further what the firm and industry specific nuances are that significantly improve the probability of the return. The business case leaves many questions unanswered and possibly unanswerable. Reinhardt notes the problems associated with empirical testing of these conditions and claims. He observes that, while the best studies note a positive correlation between improved environmental performance and financial performance, the lack of causation as well as any clear sense of the direction of causation significantly undermine the business case (Reinhardt, ). Rather, Reinhardt observes that a complex institutional environment of “coercive rules, normative standards, and cognitive values” (Hoffman, ), combined with internal motivations and firm- and industry-specific characteristics (Banerjee, ), are needed to explain corporate environmentalism (Reinhardt, ). In sum, the business case, at least in Reinhardt’s analysis, leaves the justification for corporate environmentalism undetermined.

Business Ethics The ethical justification for corporate environmentalism follows a different line of argument. Ethics is a value dialogue which moves the focus beyond the self-interest of the individual or firm. Unlike the business case which, based on economic utilitarianism,

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focuses on a business’s own economic purposes, business ethics emphasizes ethical norms in society as a foundational focus. Although some argue that business should not concern itself with the environment on the basis of role differentiated ethics (Brenkert, ), the majority of thought is that business organizations as societal actors and/or as reflections of the personal values of management, ought or could engage in some form of environmentalism for ethical reasons. In this lens, corporate environmental ethics are a subspecies of broader environmental ethics, defined as “[a] discipline in philosophy that studies the moral relationship of human beings to, and also the value and moral status of, the environment and its non-human contents” (Brennan and Lo, ). The age-old ethical conundrum of utilitarian versus deontological ethics applies to the discussion and debate about ethics and the environment. Is nature to be valued and considered on the basis of its utility to a single species, namely the human species, whether the current cohort or all cohorts present and future? Or, is nature a being in its own right to be treated with respect on the basis of its intrinsic values apart from its utility to the human species? While the answers to these questions are inconclusive in this long running debate, pragmatic solutions are often explored through stakeholder, stewardship models and ethical implications of legitimacy. Stakeholder theory holds that the firm is best conceived of as a set of stakeholders whose demands on the firm must be considered (Donaldson and Preston, ). By some accounts, the natural environment is to be considered a stakeholder in its own right (Phillips and Reichart, ). The question posed in this context is: what type of ethical rights does the natural environment have and what obligations does the firm have with respect to the ecology (Bazin, )? The pragmatic approach to answering this question is well articulated in the language and metaphor of “stewardship.” Stewardship theory can be defined as “the responsible use (including conservation) of natural resources in a way that takes full and balanced account of the interests of society, future generations, and other species, as well as of private needs, and accepts significant answerability to society” (Worrell and Appleby, , ). While it includes some of the ideas of sustainable management, drawing from economic utilitarianism, it has a level and form of accountability that goes beyond economic theory (Hausmann, ). Stewardship differs from sustainable management in that its focus extends beyond the human species and in that it has a broad public focal point for its accountability. That is, while sustainable management includes future generations, it does not usually take account of other species nor consider accountability beyond the firm’s shareholders or at least not beyond human stakeholders (Worrell and Appleby, ). Stewardship includes the whole of the ecology and is accountable to the whole of society. The ethical considerations informing stewardship are part of the core of CSR. While stewardship theory effectively mobilizes the ethics of corporate environmentalism, it faces a number of clear challenges. Not only does it face the challenge of sustainable management, namely, that diverse groups have a range of interests, some of which will inevitably be in conflict, but it has additional problems. Worrell and Appleby describe

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these as an “increased and explicit role for managers/owners in delivering public benefit as a core part of their jobs . . . [as result of] acceptance of a significant degree of public oversight; [and] serious consideration of the interests of other species” (Worrell and Appleby, ). In other words, stewardship accepts what the business case explicitly rejects—the transfer of wealth from private to public without expectation of a return. It argues normatively that there is an obligation even when “it does not pay to be green” (Orts, ). Both stakeholder and stewardship theories struggle with a range of problems. For example, how are these ethics to be integrated with the economic individualistic drivers behind private enterprise? Further, they leave the fundamental problem of balancing economic and environmental goods, a social cost-benefit analysis, without much positive guidance beyond a caveat that “business should engage in public debate in terms of the public interest, and not just strategically or hypocritically” (Orts, ). Essentially, it is a problem of how business as a social institution is embedded within the rest of society and the ecology generally (Sheehy, ). A third lens on business ethics and the environment builds on legitimacy theory. It examines, among other things, the ethical use of power and particularly the use of the political power which accompanies economic power (Suchman, ). Political and ethical theories of CSR suggest that the use of power is only legitimate and ethical when wielded within the bounds of social contract, as for example, when it is constrained by human rights (Logsdon and Wood, ). In this ethical view, humans are not simply economic inputs, the natural environment is not simply an exploitable resource, nor are firms merely economic actors. Rather, firms are actors in a human society. They are but instruments for the achievement of broader social ends, something Adam Smith recognized in his justification for private enterprise: “By pursuing his own interest he frequently promotes that of society” (Smith, ). In other words, Smith justified private enterprise and free markets as a means of more effectively promoting the public good and, as our understanding of public good expands to include the environment, the objective and obligations of private enterprise are extended to include an objective and moral duty to take care of the ecology. Having used this section to examine exemplars of political, economic, and ethical approaches within corporate environmentalism, we turn next to consider environmental law.

U E L

.................................................................................................................................. Environmental law finds itself at the meeting point of two profoundly conflicting agendas and two fundamentally conflicting needs. The agendas are those of private property and of conservation—a state responsibility for the welfare of the populace often expressed in constitutional law as “peace, order and good governance” in Westminster systems. The conflicting needs are seen in the views of nature as both

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“a rich reserve of resources and as a dump for the refuse produced by resource exploitation” (de Sadeleer, , ). This section explores how environmental law attempts to address these divergent agendas and needs.

Development of Environmental Law: Scope, Doctrine, and Philosophy Environmental law is simultaneously an expansion of and restraint on property law— an ancient area of law arising from feudal society. A fundamental norm of property law is clear in Blackstone’s oft repeated statement “There is nothing which so generally strikes the imagination, and engages the affections of mankind, as the right of property; or that sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual in the universe” (Blackstone, , bk , ch. ). This stark, powerful description of property law and its psychological impact draws attention to the individualistic doctrinal foundation of rights in property law and the fundamental challenge it poses to the public focus of environmental law.

Scope and doctrine Environmental law differs from property law and most other areas of law by its focus on subject matter and its philosophical foundation. Unlike other areas, environmental law follows from concerns about the physical, natural environment and is based on a philosophy of sustainability rather than the interpersonal behavioral focus of most of law which considers people as bearers of rights and duties. While the principles and doctrines of environmental law have been created and drawn from other areas of law, environmental law is distinctive. It responds to the whole spectrum of individual, social, and natural needs. At its core, environmental law reflects contested answers to specific questions concerning understandings of and approaches to the natural environment. It provides shifting and contested answers to the fundamental question of whether the environment is merely a personal, individual service or commodity and, if not, whether the environment is a commons, a place or space to be shared by all generations, present and future, equally for the collective purpose or the common good of survival. This problem of conflicts is considered in the philosophy of environmental law and is not new—for example, Shogunate Japan addressed similar issues in its forestry policies in the seventeenth century (Iwamoto, ; Totman, ).

Philosophy of environmental law At a philosophical level, environmental law addresses such thorny questions as: “is there a right to a clean environment?” and “is there a duty to preserve the commons for minors and unborn unable to assert rights?” It further attempts to answer such

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questions as: “does the natural environment have its own rights?” Without answering any of these questions definitively, environmental law attempts to mobilize a dynamic, pragmatic philosophy by institutionalizing behavior that recognizes and supports the ability of the natural environment to support all animal species, including humans, while providing access to resources for necessities. This objective is predicated upon the philosophical view that: () the human species cannot be seen apart from the natural environment and () just like all the other species, the human species is both a destructive, consuming force and a contributor. What sets the human species apart from the others, however, is that it can act with a conscious decision to wreak destruction at a systemic level or the species can choose to act as a custodian or steward of the natural environment. As such, environmental law rests on a philosophical foundation that humans as sentient decision-makers have a distinct role to play visà-vis the environment. The philosophical debate extends beyond exclusive consideration of the human species to consideration of the environment as an end in itself. Philosophers holding this belief consider the environment to have intrinsic value separate and apart from utilitarian values and wholly independent of human interests (Singer, ; Stone, ). In this view, represented by the “deep ecology” movement, an anthropocentric view of the planet is rejected and replaced with a holistic view, and rights and duties rearranged to reflect that view. According to this view, humans must not only have limited rights to exploit the natural environment in order to maintain life and be required to consider themselves as stewards, but must consider the needs of nature, plants, and animals as being on an equal footing. The dilemma facing environmental law makers is put well in the title “Feeding People versus Saving Nature?” (Rolston, ). In sum, given the need and nature of our species, we are required to take from nature, but in light of the threat that human activity, including business activity, poses to the environment, environmental law seeks to place reasonable limitations on use of the environment to ensure sustainability. For the philosophers of environmental law this dilemma poses distinct issues. Given the continuing and unavoidable reliance of society as a whole on the natural environment, some conception of sustainability is necessary. The concept of sustainability, however, provides a foundation for environmental law that is radically different from law generally and property law specifically. Whereas law traditionally looks backwards at events that have occurred and applies cases from the past to judge present actions, environmental law and the philosophy of sustainability incorporate a specific vision of the future, preserving it as a whole. Further, given that goods and services are dealt with in law to a considerable extent through private property rights, the commodification of environmental goods and services makes it a logical choice to place environmental law as a subcategory of property rights in the context of a market economy. Accordingly, environmental law is expected to create or facilitate individual property rights that allow the exploitation of the natural environment for private profit within the limited time frame of transactional economic interests. Thus at a philosophical level environmental law is required to facilitate the commodification of the natural

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environment for profit as fundamental objective along with its public focused unlimited holistic future vision. This discussion leads to a consideration of the concept of sustainability.

Concept of Sustainability in Environmental Law While earlier environmental law conceptualized the natural environment as separate and apart from humanity and saw economic development as a unique independent endeavor, pursuant to the Brundtland Commission report, Our Common Future, nature, humans, and development were reconceived as an inseparable whole. In her Chairman’s foreword, Dr Brundtland stated “the ‘environment’ is where we live; and ‘development’ is what we all do in attempting to improve our lot within that abode. The two are inseparable” (World Commission on Environment and Development, ). In other words, the environment was not to be viewed as an alien system available for exploitation without consequence. Rather, humanity as a species, a society, is embedded in and forms part of the natural environment. Accordingly, environmental law in this context is required to ensure sustainability by protecting the natural environment from excessive exploitation for private profit and preserving it as a public good. The change to international soft law, precipitated by the Brundtland Report, resulted in a new program of law reform. The core concept or doctrine drawn from the Brundtland Commission’s is “[sustainable development] meets the needs of the present without compromising the ability of future generations to meet their own needs” (World Commission on Environment and Development, ). In other words, the goal is not to meet the economic ambitions of the present, or the needs of current populations, without consideration of the future. Rather, it is a broad conception of human needs that includes adults, young people, and even the unborn. This focus of sustainability is at odds with the prior commodification-exploitation norms associated with property law. Further, it is at odds with other areas of law that either ignore or limit the rights of minors and the unborn. As a result, a whole set of new doctrines needed to be developed and existing legal doctrines needed to be reformed to address the issues, parties, and rights as they touch upon the subject matter of environmental law. Acknowledgement of the challenge of these conflicting objectives and norms not only clarifies the politics surrounding environmental law and related law reform but also the necessity of a management approach to environmental resources. The environment can neither be preserved in its pristine form free of human interference nor be exploited without restraint oblivious to the natural requirements of all the rest of the species, whether human or non-human, born or unborn. Considering the foregoing, it is obvious that environmental law must adopt a strategic management approach toward the environment to provide a dynamic balance among the competing interests, prioritizing different interests at different times with respect to different resources and in different locations.

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One way to examine how this dynamic is worked out is through an analysis of CSR and environmental law, the topic to which we turn next.

M  CSR  E L: F C  C  S R

.................................................................................................................................. Public interest in the quality of the environment did not develop until the late nineteenth century when concerns about public health arose. Environmental sustainability legislation made its introduction in the s and s primarily in the Europe and the US as already noted (Banerjee, ). As a result, a program of significant legal reform aimed at environmental protection was undertaken. A broad range of laws was created from international treaties aimed at environmental issues as diverse as international marine environmental law and oil spills, to national laws focused on endangered species, air quality, and emissions, as well as conservation of the wilderness. Agencies were created and tasked with the administration of these laws, engaging in monitoring for compliance as well as taking enforcement measures. Major improvements in the quality of the environment ensued. These measures were achieved largely on the basis of hard law, administered by the welfare state often using command-andcontrol approaches. While the welfare state’s command-and-control legislation with its historic, heavyhanded, regulatory approach suited some parties and was able deliver direct and meaningful gains, it came to face overwhelming challenges. As business and environmental law scholars Wood and Richardson see it, command and control came to an end in environmental law as a result of the rise of the regulatory state, along with “a change in the character of the environmental crisis, and the emergence of a global consensus around an agenda for corporate social responsibility” (Wood and Richardson, ). Economists Lyon and Maxwell state that command-and-control regulation were set aside in of favor voluntary agreements because “increasingly complex and unrealistic regulations, technological change and scientific discoveries . . . made existing laws practically unenforceable, growing political resistance to regulations that are costly and difficult to enforce, shrinking regulatory budgets” (Lyon and Maxwell, , ).

Neo-Liberalism, the Regulatory State, and the End of Command and Control Following the decline of Keynesian economics in the s, and the related decline in the public welfare state, states around the globe began adopting a neo-liberal political philosophy, which, based on neoclassical economics, promoted the expansion of

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private property and related market-based solutions. These changes were marked by a retreat of government and rise of what came to be known as the regulatory state. In the regulatory state responsibilities for development, monitoring, and enforcement of standards is devolved to private actors, leaving the state agencies focus on the regulation itself (Feaver and Sheehy, , a). Rather than withdrawing wholly from environmental regulation, government turned to regulatory specialists who developed a wide range of new regulatory approaches (Feaver and Sheehy, b; Sheehy and Feaver, ). Adopting these approaches allowed government to pass on a considerable portion of the regulatory burden to the companies themselves. For example, in the USA where these new regulatory techniques were adopted earlier than elsewhere, companies and the related industry associations, along with the Environmental Protection Agency (EPA), came to prefer voluntary approaches. The EPA found the approach appealing in that it reduced congressional demand to enforce impossible demands with ever shrinking budgets. For the industry, the approach created agreements that were non-binding, less administratively intense (i.e. reduced paperwork), and took an incentive rather than punitive approach, meaning that there was money to be had for compliance rather than simply the threat of punishment for non-compliance. Regulatory scholars saw the costs and cumbersome bureaucracy command and control created (Gunningham et al., ) and proposed solutions using new ideas of regulation as social interactions and by turning to other institutions such as markets (Ayres and Braithwaite, ). This renewed interest in markets led to an increased focus on issues related to market operations, including addressing market failures such as information asymmetries. In sum, command and control turned out to be too costly, at odds with the new neo-liberal political philosophy, neoclassical economic theory, the regulatory state, and from a regulatory perspective, ultimately impossible to implement. New social-science-inspired regulatory innovations were necessary and welcomed, and combined or seen as complementary to CSR.

New Regulatory Approaches: Standards and Reporting as Regulation by Information Associated with the decline in command and control, a reliance on a range of new regulatory tools, devices, and approaches emerged. These new regulatory approaches are neatly conceptualized in the slogan “carrots, sticks and sermons” (Bemelmans-Videc et al., ). One such new regulatory approach, which has the potential to facilitate all three is information disclosure. Information disclosure is premised on the idea that actors will behave differently if they are part of a “club” (Sahlin-Andersson, ), know third parties are watching (Sheehy, ), and know those third parties are prepared to act (Case, ). In economic theory, disclosure regimes operate to solve a type of market failure, namely the problem of information asymmetries. Where asymmetrical information

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occurs, the party with information is in a position to exploit the ignorance of other parties. The classic example of information asymmetry, and its solution by disclosure, is in securities markets. In such markets, sellers have in-depth information relevant to pricing a security and a great degree of control over that information. By forcing sellers to disclose information, regulators can level the playing field and facilitate buyers in making properly informed valuations and decisions. In the case of the environment, disclosure is used to provide parties with information about environmental factors, including sources, materials, and processes involved with production, in order to facilitate buyers making better decisions addressing concerns, whether individual health and safety, local or broader community concerns, or the environment itself (Case, ). Efforts to address the environmental impacts of industrial activity with information disclosure were pioneered in the USA. Initially the federal body, the EPA, mandated disclosure in a narrow range of activity. The EPA required disclosure about a limited number of toxic chemicals in its Toxic Release Inventory scheme. In essence the EPA required firms to disclose all releases of toxic chemicals above a certain threshold. Over time, disclosure practices were copied and extended voluntarily by businesses, often in response to such disasters as the Love Canal. The Responsible Care initiative, for example, was an industry-wide response to that event and, among other things, required environmental reporting (Pitts, b). The creation and wider dissemination of voluntary standards saw different industries adopt and different companies create a variety of environmental standards. Standards such as those set out in the Forestry Stewardship Council and the International Standards Organization’s ISO  became popular with a range of actors for different reasons. While standards such as the latter ISO  appear to have had a stronger positive effect (Montabon et al., ), others such as the Forestry Stewardship Council (Marx and Cuypers, ; Pattberg, ) and Responsible Care program may have a mixed or even negative effect at least on some parts of an industry (King and Lennox, ). All of these standards, which were voluntary in terms of uptake, required information disclosure in the form of sustainability reporting. Indeed, such reporting has now become so widespread among leading businesses around the globe that it has been described as “de facto business law” (KPMG, ). The preeminent reporting standard, the Global Reporting Initiative (GRI), is a private response to the proliferation of standards. It is a development of CERES Principles used to pressure firms by presenting a coherent set of standards. The GRI is now a collaborating center of the public United Nations Environmental Program and works closely with the UNGC under a Memorandum of Understanding. This mix of private regulation and public law is a prime example of how CSR and environmental law have become intertwined and develop together. In the case of environmental law it has developed and adopted not only preferred regulatory methods but also new standards in the form of “directing principles.” We turn next to discuss these principles.

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New Regulatory Norms: Three Environmental Principles Over the last several decades a set of new directing principles has emerged from international, regional, and national environmental regulation and from private voluntary standards. These principles, namely, “polluter pays” “prevention,” and “precautionary principles,” have become the directing principles of environmental law, i.e. normative principles with potential legal consequence (de Sadeleer, ). At a global level these principles provide a foundation for discrete contextual adaptations appropriate to different countries, ecologies, and industries. Although such principles are inherently vague, they lay out a program of action and law reform (de Sadeleer, ). We turn next to review each in turn.

Polluter-pays principle A basic concept in economics is the concept of externalities. In simple terms, externalities refer to those costs and benefits which cannot be captured by the parties to a transaction. In economic terms they are one type of market failure. Such externalities may be beneficial or harmful. In the latter case, they are referred to as “social costs” (Coase, ). Social costs such as pollution occur because the law grants producers the right to produce them without paying or internalizing the costs (Sheehy, ). The result is that producers are able to produce and pollute and sell their goods or services without charging the full price incurred—the full price would necessarily include the social cost, the price of pollution. The result is that price signals are distorted and an inefficient allocation of economic resources follows (de Sadeleer, ). While neoclassical economists provide a theoretical solution to social costs in property law, even Coase, whose model provides that solution, acknowledges its severe limitations in realworld contexts (Coase, ). As producers are permitted to create social costs by law, the only solution to social costs is by law requiring internalizing those externalities. The polluter-pays principle is designed to force producers to pay the full costs of the provision of their goods and services. The two preferred regulatory instruments to implement a polluter-pays principle are creating a tax to approximate the value of the social costs or legislating a prohibition/limitation on the production of the pollution costs in the first place. At a philosophical level, the polluter-pays principle implicitly supports the view that the environment and its pollution and destruction are commodities that can be bought and sold. This commidity view of the environment runs counter to one of the fundamental philosophies underpinning environmental law, namely, that the environment has an intrinsic value and that value is not contingent upon its transactional value.

Principle of prevention The second principle, the principle of prevention, expresses an end or at least a limit to the view that nature is a limitless resource available for human exploitation. It is an acknowledgment of a duty to avoid or prevent environmental harms or to remedy or limit harms already done to the environment or preventing further ongoing harm. This

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principle is of particular value when damages are “likely to be irreversible or too insidious or diffuse to be effectively dealt with through civil liability or when reparation would be extremely expensive” (de Sadeleer, , ). In other words, this principle is appropriate where there is a defined risk to the environment with a certain probability in contemplation or afoot. Preferred regulatory instruments implementing this principle include quality standards to limit pollution and impact assessments. Both of these instruments, however, allow for some degree of environmental degradation and in doing so legitimize degradation (de Sadeleer, ). Again the philosophy underpinning this principle, at odds with other aspects of the philosophy of environmental law. We turn next to the third principle.

Precautionary principle Although law traditionally operates on a maximization of liberty philosophy, the precautionary principle takes the opposite approach. Rather than allowing parties maximum liberty and afterwards adjudicating whether the rights of others have been breached or parties have failed to fulfil their duties, the precautionary principle creates a duty to take a circumspect approach requiring the avoidance of harms in the first place. This change is a significant shift in law. The precautionary principle reverses both the onus and evidentiary standard. Rather than forcing a harmed party to demonstrate actual harm, the precautionary principle places the onus on those who want to introduce a new product or project to demonstrate its safety (Pitts, b). Thus rather than an obligation for remediation following environmental harm enforced through civil litigation, or remedy or limit clear and known harms, parties under the precautionary principle are duty-bound to avoid the harm in the first place. The evidentiary standard too may change. Whereas both polluter-pays and the principle of prevention deal with proving known harms, the precautionary principles addresses unknown harms, perhaps unquantifiable harms, even if the underlying evidence or knowledge is accepted to be less than certain. Noted environmental scholar, Nicholas de Sadeleer, sees the precautionary principle as the third phase of environmental protection policy, following remediation and timely prevention (de Sadeleer, ). This third phase anticipates harm even in the absence of definitive proof that the harm will materialize. Whereas clear and certain risk calls for prevention, uncertain risks require precaution. The precautionary principle shifts the evaluation and regulatory response considerably. It is explained simply as follows: “in the face of threats to serious or irreversible environmental harm, the absence of full scientific certainty should not stand in the way of precautionary measures” (Pitts, b, ). It provides guidance for actors in the face of uncertainty. Decision-makers are not expected or required to stand in abeyance while looking for certainty of harms; rather, they are duty-bound, even in the face of uncertainty, to avoid potentially harmful activities. The precautionary principle can be enacted through a whole range of regulatory approaches from bans and phase-outs to notifications, incentives, and the like. It necessarily is dynamic in that, as new information

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becomes available, decisions already made under the principle must change, either allowing further exploitation or further reduction (de Sadeleer, ). Each of these three principles allows a dynamic balancing of the conflicting agendas of private property exploitation and constitutional imperative of preservation of the environment for the populace. Such a principled approach is appropriate for, as de Sadeleer observes, the decline in the state and its hard command-and-control approach requires a new approach that more accurately reflects: “a world of permanent change [where] action will be more efficient the more easily it can be modified.” He continues: “States and the international community increasingly act on the basis of recommendations, resolutions, and statements of intent: that is, subdued forms of intervention. This type of law, termed ‘soft law’, is replacing the ‘hard law’ advocated by those who support control and command systems” (de Sadeleer, , ). In other words, in the context of dynamic social and natural environments the ability to act quickly and wisely is to be highly valued.

E  CSR  E L

.................................................................................................................................. CSR and environmental law have developed in tandem to a significant degree. In addition to sharing the three guiding principles of polluter-pays, principle of prevention, and precautionary principle, both have relied on regulation by information in the form of sustainability reporting as a key enforcement mechanism. These new regulatory approaches of standard setting and reporting, however, are far from fail safe. Regulators and society generally have noted not only the limited ability of these approaches to deliver significant environmental improvements but scholars too have identified their theoretical weaknesses, particularly the lack of hard enforcement regimes (Parker and Howe, ; Sheehy, ). Nevertheless, these efforts have not been without success. Over time the environmental aspect of CSR has become a major focus of business attention. There are a variety of reasons for this focus on environmental performance, but one obvious factor is a wide perception of a clear business case. Much scholarship and normative effort has been made to convince business leaders that there are cost savings and potential strategic value in being part of the broader green shift in society (Owen and O’Dwyer, ). Reinhardt argues that from an economic perspective, however, not only is the business case limited, but that fundamentally it is unreasonable to expect companies to treat environmental investment differently from any other investment. Care for the environmental impact of operations, he argues, is unlikely to fall outside the normal domain for business decisions, namely profit maximization through minimal investment in processes and materials (Reinhardt and Stavins, ). Implicit realization of these contradictory stances may contribute to a less than full embrace of an environmental agenda by many businesses and industries.

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Considerable business environmental attention has focused on environmental reporting (Owen and O’Dwyer, ), variously and confusingly referred to as “sustainability reporting” or “corporate responsibility reporting” among other things (Pitts, b). Whether such reporting improves environmental performance is, as noted above, unknown. An issue which arises from the widespread practice of reporting, combined with the belief in the importance of being seen to be “green,” is the practice of “greenwash”—a practice in which businesses invest more in publicizing their green behavior than in actually improving environmental performance (Greer and Bruno, ; Wood, ). The problem of greenwash is significant, particularly where much of the focus of regulatory attention is on reporting. Indeed, early environmental reporting was rightly dismissed as mere dissemination of firm information aimed at increasing goodwill and dubbed “green glossies” (Case, , ). This practice undermines the credibility of those parties genuinely engaged in environmental protection and exacerbates the information asymmetries reporting is intended to address. In fact, to some degree, environmental reporting and related sustainability rating schemes facilitate greenwash. The Dow-Jones Sustainability Index, for example, which aims to disclose information at least nominally for the purpose of facilitating investor decisions focused on environmental issues, appears to a significant extent not to reflect business concern for the environment; rather, it exists for a variety of strategic reasons and particularly for burnishing green credentials (Knoepfel, ; Searcy and Elkhawas, ). If regulation by information in the environmental areas is to be effective, it must meet the financial disclosure standard of “full and fair” and be more rigorously and carefully theorized.

C

.................................................................................................................................. CSR and environmental law intersect in terms of subject matter, norms, and regulatory methods. They share a common concern, namely the balance between utility and preservation of the natural environment, draw from the same international soft law instruments and attempt to guide human behavior in less harmful directions. Nevertheless, CSR and law are far from being interchangeable solutions to the problem (Sheehy, ). Case observes that “disclosure strategies are imperfect substitutes for direct legal controls on environmental conduct. Nonetheless, concerning the search for viable alternatives to traditional regulatory choices . . . the substantial promise of information disclosure as a supplement to the existing regulatory system” deserves consideration (Case, , ). Thus the issue is not simply about the limitations of voluntary reporting, but how it can be used in concert with other regulatory methods to achieve changes in industrial practice to shift to living sustainably. Given the heavy reliance on voluntary measures, sustainability reporting, and their limited effect, it is appropriate to identify how else government should regulate.

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Vogel illustrates the point by taking the case of the reduction in automobile emissions. He notes that the  percent reduction in emissions between  and  was the result of direct government regulation. Further, he notes that automobile manufacturers usually lobby against environmental regulation on the basis that it will harm their bottom line (Vogel, )—a practice that business ethics scholars argue is inconsistent with the proper role of business within society and therefore unethical (Orts, ). Vogel is not arguing that voluntary methods are worthless, ineffective, or to be abandoned. Rather, his point is that government still has an important role to play in the protection of the environment. CSR is not a panacea for all the ills society suffers as a result of business activity and the temptation to rely on it excessively must be avoided (Lynch-Wood et al., ). As we have seen it is unrealistic to expect companies to reduce their environmental footprint on their own. Accordingly, any voluntary CSR regulation must be used in concert with mandatory regulation. The challenge remains to develop effective, relevant, and broad environmental regulations and policies that can readily be adjusted in a timely manner to address the changing needs of both the social and natural environments.

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Sheehy, B. . Defining CSR: Problems and solutions. Journal of Business Ethics, (), –. Sheehy, B. . Private and public corporate regulatory systems: Does CSR provide a systemic alternative to public law? UC Davis Business Law Journal, , –. Sheehy, B., and Feaver, D. . A normative theory of effective regulation. UNSW Law Journal, (), –. Singer, P. . Animal Liberation: New York: Random House. Smith, A. . An Inquiry into the Nature and Causes of the Wealth of Nations. Ed. S. M. Soares. MetaLibri Digital Library. Sommer, A. A. J. . Whom should the corporation serve: The Berle-Dodd debate revisited sixty years later. Delaware Journal of Corporate Law, , –. Stone, C. D. . Should trees have standing: Toward legal rights for natural objects. Southern California Law Review, , –. Suchman, M. C. . Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, (), –. Totman, C. D. . The Green Archipelago: Forestry in Preindustrial Japan. Berkeley-Los Angeles and New York: University of California Press. United Nations Division for Sustainable Development. . United Nations Conference on Environment and Development (Agenda ). Retrieved from . United Nations. . United Nations Global Compact: Who we are. New York: United Nations. Retrieved from . Vogel, D. . The Market for Virtue: The Potential and Limits of Corporate Social Responsibility. Washington, DC: Brookings Institution Press. Wood, S. . Green revolution or greenwash? Voluntary environmental standards, public law and private authority in Canada. In Law Commission of Canada (ed.), New Perspectives on the Public–Private Divide, –. Vancouver: UBC Press. Wood, S., and Richardson, B. . Environmental law for sustainability. In S. Wood and B. Richardson (eds.), Environmental Law for Sustainability, –. Oxford: Hart Publishing. World Commission on Environment and Development. . Our Common Future. The Brundtland Report. New York: United Nations. Worrell, R., and Appleby, M. C. . Stewardship of natural resources: Definition, ethical and practical aspects. Journal of Agricultural and Environmental Ethics, (), –.

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  ......................................................................................................................

    ......................................................................................................................

 

T substantial progress has been made in environmental management by both businesses and government, goaded on by public interest groups, environmental management remains a serious challenge that shapes the legal and economic context of management and impacts the pace and nature of technological innovation. Environmental management is concerned with the inevitable by-products of business activities. In bringing useful goods and services to customers, businesses inevitably create these by-products which must be managed. Environmental management poses four challenges to businesses. The first is public attitudes, which are generally favorable to pursuing the goals of environmental protection regardless of the costs. The second challenge comes from the environmental movement; in some forms its ideology is not in harmony with the conventional goals of most businesses. Its viewpoints are an important influence on society. A third challenge is posed by economic analysis, which can play a useful role in environmental management, but whose role is limited because it cannot grapple with every aspect of issues that businesses confront. A fourth challenge arises because of the inadequacy of scientific and technical information, which also is incapable of resolving every aspect of thorny environmental issues. Together, the four challenges mean that there are no simple answers to the question of how businesses should manage the environment. They have substantial discretion in how to manage these issues. They can choose different strategies. One option is to adopt a strategic approach in which they try to achieve superior returns for the firm while they minimize harms to society. Strategic environmental management (SEM) can lead to better outcomes for companies and for society. SEM is a capability within the framework of the resource-based view (RBV) that can assist firms in achieving a sustainable competitive advantage. From the perspective of environmental management,

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it raises interest because of the question of how this capability is acquired. This chapter considers factors that might lead businesses to acquire a capability for SEM. The roles of public policies, markets, and the values and beliefs of management are considered. Each of these three can pull firms in this direction but none has sufficient power to win all firms over to the tenets of SEM in their entirety. Two Issues are used to illustrate these problems. This chapter starts by looking at waste production as a by-product of business activity. Then it examines the four challenges of environmental management. It discusses solid waste management and atmospheric pollution as central issues. It concludes with an analysis of SEM and the three factors that pull firms in this direction.

W P   B-P  B A

.................................................................................................................................. Natural resources must be available for businesses to make the goods and provide the services that people need. Once these goods are created the second law of thermodynamics kicks in, however (Georgescu-Roegen, ). The Second Law of Thermodynamics states that there is always a waste by-product of any process. All business processes meant to make the goods and provide the services that people need result in waste. Waste breeds the environmental and pollution problems that affect businesses. Businesses produce waste in the process of extracting raw materials from nature, transforming the raw materials into useful products, and transporting the finished products to markets (Freeman et al., ; Kneese et al., ). These essential business activities yield by-products which have undesirable qualities that have to be absorbed by nature. Thus, the physical environment provides goods and materials to the economy, and the goods and materials flow back again to the environment as wastes or residuals. In making business decisions, managers need to keep the costs and risks of waste generation in mind. They also need to be aware that preventing and managing wastes provide opportunities for business gain (Esty and Winston, ). Managers are in a position to profit from handling society’s wastes creatively. People have long recognized that nature is of critical importance as a source of material inputs to economic activity, but they have been less aware that the environment also plays an essential role as a receptacle for society’s unwanted by-products. A simple materials balance model illustrates the relationship between the economy and the environment. The production sector, which consists of mines and factories, extracts materials from nature and processes them into goods. Transportation and distribution networks move and store the finished products before they reach the point of consumption. The environment provides the material inputs needed to sustain economic activity and carries away the wastes generated by it.

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   



The environment provides essential elements for materials processing, including air and water, fossil fuels, agricultural products and timber, and minerals. The numerous by-products of these processes must be absorbed or assimilated by the environment. The by-products include air pollutants such as hydrocarbons, carbon monoxide, sulfur dioxide, and particulate matter; solid wastes such as bottom and fly ash from combustion; radioactive wastes; and noise. Energy conversion supports materials processing by providing electricity, heating, and cooling services. It also aids in transportation and distribution. The useful energy from energy conversion helps make food, forest products, chemicals, petroleum products, metals, and structural materials such as stone, steel, and cement. The processes by which these materials are made, however, produce wastes, noise, and rubbish. Some waste materials are recovered by recycling, but most are absorbed by the environment. They are dumped in landfills, burned in incinerators, and disposed of as ash. They end up in the air, water, or soil.

F C

.................................................................................................................................. Four challenges in managing this waste will be examined: public attitudes; the pressure applied to businesses by environmentalists; the role that economic analysis can play in environmental management; and the limitations of scientific and technical information in resolving environmental issues.

Public Attitudes Public attitudes toward the environment have been fairly stable and fairly favorable (Franzen and Vogl, ). Over the – period in the US, Japan, and Germany more than half the population in each country claimed to be “doing the right thing for the environment regardless of cost” (see Figure .). Paying much higher prices for environmental protection received less support, but most people opposed the statement that too much attention had been given to the environment, as opposed to prices and jobs, and they also expressed frustration that their influence on improving the state of the environment was not high. They expected governments and businesses to make the needed improvements.

The Environmental Movement The environmental movement was in the forefront of making people more conscious of environmental degradation. Various elements within this movement tried to get business to be more responsible. They used different tactics. Just one example of these campaigns will be described here as it had substantial influence.

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70 60 50 40 30 20 10 0

1993

2000 USA

2010

1993

2000 Japan

2010

1993

2000 Germany

2010

I do what is right for the environment, even when it costs more money or takes more time (% very and fairly willing). How willing would you be to pay much higher prices in order to protect the environment? (% very and fairly willing). We worry too much about the future of the environment and not enough about prices and jobs (% strong and fairly strong disagreement). It is just too difficult for someone like me to do much about the environment (% strong and fairly strong disagreement).

 . Public Attitudes towards the Environment

The “Coalition for Environmentally Responsible Economies” (CERES) was established in the wake of the Exxon Valdez oil spill (CERES Inc., n.d.). CERES is a non-profit advocacy organization with the mission to mobilize investor and business leadership for a sustainable economy. It brings together disparate stakeholders— investors, companies, and public interest groups—to change corporate environmental practices. CERES asks companies to adhere to principles to reduce their wastes, use resources prudently, market safe products, and take responsibility for past harm. Many companies have endorsed these principles or adopted equivalent ones. CERES also launched the Global Reporting Initiative, which has become an international standard used by over , companies for corporate reporting on environmental, social, and economic performance, and it has been active in the campaign to reduce climate change, working with institutional investors, the United Nations, and businesses to promote progressive energy and climate legislation. Two different strands of environmentalism exist and they pose different challenges to business (Nash, ). The conservation movement, which predates the modern environmental movement, was anthropocentric (human, as opposed to naturecentered), technologically optimistic, and chiefly concerned with the efficient use of resources. It adhered to the tenets of scientific management; that is, its aim was to avoid waste by promoting the rational and efficient use of natural resources and maximize long-term yields. Leaders of the conservation movement generally did not question the market or the system of political authority.

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   



In contrast the other strand of the environmental movement argues that the negative effects of human economic activities on the environment are greater than the positive effects and that nature should be revered for the spiritual experience it provides (Hoffman, ). What humans can learn from nature is that they are not above it but a part of it. They should preserve nature not simply for its economic use but for its own sake (McKibben, ). This strand of environmentalism has led to a questioning of the logic of private investment decisions, production, expansion, and economic growth. Nature has rights over which human beings have no intrinsic authority. Therefore, humans should be stopped from exercising their dominion over nature for the sake of material progress. According to this strand in the environmental movement, the burden of proof should rest with proponents of economic growth. The goal should be a steady state economy (Daly, ). This strand in the environmental movement calls on people to live simply, without display, excess, or ostentation. People should accept a new frugality, joyous austerity, voluntary simplicity, conspicuous frugality (Elgin, ). According to this vision of the human future, more people will earn their living from services than from manipulating nature. Without the burden of conspicuous consumption, they will have the free time to do organic gardening and recycling, take public transportation, and maintain their homes and appliances to preserve energy. The implications for business are that the products it makes must be designed better and last longer (Hawken et. al., ). They must be lighter, stronger, easier to repair, and consume less energy. They should not be made for premature obsolescence, as they will be traded again and again and last a long time.

The Role of Economic Analysis Economic analysis may be used to show that the limits to growth, emphasized by the nature-centered strand of environmentalism, can be overcome via human ingenuity (Solow, ). It also can show that the benefits afforded by environmental protection have a cost, and government programs to clean up the environment can fail, and be just as culpable as businesses in causing environmental contamination. Though economic analysis is a useful in rebutting some claims that environmentalists make, as a tool or environmental management it has limits. As far back as the late eighteenth century, Thomas Malthus made pessimistic predictions about the limits to growth, but the lesson of history is that technological innovation and substitution in response to price and other societal signals are able to avoid resource exhaustion. Resource scarcity is reflected in the price of a given commodity, and as resources become scarce, their prices rise accordingly, which induces substitution and technological innovation. People turn to less scarce resources that fulfill the same basic technological and economic needs. This transition, however, does not necessarily have to happen—there are ultimately physical limits—and it does not necessarily have to be smooth (Commoner, ). Considerable turbulence and

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dislocation can accompany the process. The transition can be very sticky as there are winners and losers and the losers have every reason to resist movement in a new direction. The process also assumes that the price system is efficient and reflects true value, which is not always the case because of both slow adjustment of the price system and extensive government interference. An important economic tool for environmental management is cost-benefit analysis. Common sense suggests that the benefits of environmental protection should be balanced against the costs. Measuring the benefits is very complicated, however. It involves, for instance, determining the conditions of exposure to environmental contaminants and the adverse effects (Marcus, a). Long latency periods and the impact of background contamination complicate these matters. So too does assessing the implications for human populations of laboratory studies of nonhuman animal species. Simple cause and effect statements are out of the question. Risk must be stated in terms of probabilities, not certainties. Reducing environmental contamination involves asking the extent to which the proposed methods of reduction are likely to be effective and how much they will cost but gaps in knowledge remain. Indeed, some legislation in the US seriously hinders, if not entirely prohibits, the consideration of costs (e.g. Clean Air Act). Quantitative approaches to balancing costs and benefits, moreover, do not eliminate the need for qualitative judgments. It is not possible to objectively value a magnificent vista obscured by air pollution or the loss to society if a plant or animal species becomes extinct, let alone a human life. Intergenerational equity is also involved. Typically the concerns of future generations cannot be not fully taken into account, and generally they are not, a very good example being climate change. Furthermore, while the poor may enjoy more of the benefits of the cleanup of a hazardous waste site, they might also have to bear a higher proportion of the costs. How can these considerations be justly compared? The problem in economic theory is that the natural world, when considered as a whole, does not have a distinct property owner (Hardin, ). The owners are everyone that has a stake in the natural world, those currently alive and those likely to be alive in the future. To organize this very large collectivity that consists of just about everyone on planet earth and have it take action is not easy, for it is not in the interest of any one of the specific parties to take on the responsibility (Coase, ). Other parties may free-ride on the back of any party that decides to become involved. It provides motivation for most people to shirk this responsibility in the hope that others will accept it. Given that nature’s owners are just about everyone, this large and diverse group is hard to organize. This group cannot easily pursue remedies in the legal system which would be the usual route for a property owner whose belongings were harmed. Each only has a small amount to gain. While each person on the planet only has a small amount to gain from the resolution of environmental issues, specific businesses may have a large amount to lose if legislation is enacted and regulations are put in place that curtail their activities (Wilson, ). The incentives of business to oppose the actions

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   



of public authorities on the environment, therefore, are much greater than those of the rest of humanity to promote them. No member of the public is likely to have a sufficient interest in the damage to pursue the matter further. For this reason, government is called upon in economic theory to intervene (Friedman, ). It must withstand business special interest group pressure and represent the broad interest of the collectivity. Yet just as markets fail and create externalities like pollution, so too government is not immune to the domination of special interests, to biased information, undue partisanship, reckless ideologies, personal deals and arrangements, financial wheeling and dealing, and other limitations. The “deadweight costs” of government efforts to clean up pollution must be balanced against the proposed and the ideal benefits (Becker, ).

The Limitations of Scientific and Technical Information Economic theory calls on governments to take on a disproportionate role in environmental management in order to reverse and correct the externalities that are imposed on society by business activities. For government to effectively carry out this role it has an immense burden to acquire the objective scientific and technical information that will provide it with answers to questions of environmental management. Policy-makers face the difficulty that, even if they are disinterested, this information for the most part is insufficient, inadequate, and hard-to-interpret (Marcus, b). Most important choices that governments are called upon to make are made under conditions of “residual risk” or limited knowledge. However, though complete knowledge is not available, decisions are not the result of mere guesswork either. Even if total knowledge were available, the appropriate actions to take based on this knowledge would not be apparent (Lowrance, ). Moreover, knowledge changes over time, allowing some uncertainties to be resolved while new ones develop. Choices about policy and implementation are thus made and remade in response to a sorting-out process of what is known and unknown that is regularly evolving. This process depends on the imperfect capabilities of individuals, groups, and organizations in and out of government to perceive environmental risks and to act on the basis of their perceptions. Implicit in the process there is an ongoing process of assessing “societal negligence.” Hand’s rule for assessing societal negligence postulates that, in evaluating risk, a “reasonable” person considers (a) the probability of injury, (b) the gravity of the injury should it occur, and (c) the burden of taking adequate precaution. If the expected injury (probability × gravity) exceeds the costs of precaution and no action is taken, then society is negligent (Leonard-Barton and Kraus, ). In using this framework, environmentalists would tend to emphasize the probability and costs of harm while downplaying the burdens of precaution. In contrast, businesses likely would focus on the burdens of precaution, since these burdens fall heavily on them and have farreaching implications for their products and how these products are made.

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Governments should be unbiased mediators, but, since the evidence is almost always partial and uncertain, both elected officials and bureaucrats are swayed by lobbying and pressure. Groups contribute money and try to provide information to the debate by sponsoring studies and interpreting existing studies in accord with their point of view. In the end, public officials are caught in the middle, having to make binding decisions subject to political pressure based on information that is scientifically and technically incomplete.

T I  I  P

.................................................................................................................................. Two important issues that illustrate the challenges for environmental management are solid wastes and atmospheric pollution.

Solid Wastes People in the world generate million tons of trash each year (Blumberg and Gottlieb, ). The three main methods of disposing of this waste are municipal landfills, incinerators, and recycling. While modern sanitary techniques and lined landfills greatly reduce the risk of environmental contamination, many existing landfills were built without these precautions and are little more than holes in the ground. Moreover, many were built on or near wetlands; it was believed that the water would wash away and purify the wastes. However, now it is generally recognized that waste material contains inks, paints, dyes, and a host of chemicals that can leach into the groundwater and cause serious drinking water contamination. Advances in sanitary landfilling are meant to mummify the wastes to prevent leaching. However, mummification has its own set of problems. For example, biodegradable plastics are meant to break down and may be harmful because of the complexity of their construction. They simply degrade to smaller pieces without reducing the amount of space in the landfill that they occupy. Finding new landfill space is difficult because of “Not In My Backyard” syndrome. One alternative to landfills is incineration, which can reduce the volume of waste by  percent. Other alternatives are recycling and source reduction, which prevent wastes from permanently entering the waste stream. In the rest of the world a higher percentage of the waste is recycled, and incinerated. However, the US has had trouble moving from a system that relies on landfilling to one that relies on incineration and recycling. Originally billed as a panacea for landfill overcrowding, groundwater contamination, and alternative energy generation, incinerator developers and their financial supporters estimated that the energy generated and sold eventually would amount to over half of the revenue needed to cover the costs of incineration.

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   



In the s, however, energy prices plummeted, ending hopes that the energy produced would make a major difference in covering the costs. Incineration was faced with decreasing economic justification as well as growing public opposition. Public opposition was based chiefly on environmental and health considerations. Incinerators emit many pollutants, both toxic and nontoxic, including dioxins, DDT, lead, mercury, arsenic, and benzene. Public opposition was also based on reports of operational problems, mechanical failures and shutdowns, and cost overruns. Hidden costs included water sewer lines and surface roads that had to be constructed to accommodate the increased traffic to and from incinerators. Another concern was the ash left after combustion, if categorized as hazardous. Opponents of incineration claim that municipality guarantees to provide the needed waste for incineration are a deterrent to starting effective recycling and waste-reduction programs. Proponents of recycling claim that, while incineration generates a small amount of energy, recycling saves much more. Recycling programs in the US have met with some success since the passage of the Resource Recovery Act in . Recycling rates, however, vary from material to material. Recycling requires a high degree of coordination among consumers, business, and government. Consumers need to provide waste material and to separate it. They then need to buy products made from recycled, or secondary materials. Businesses have to choose secondary materials over virgin materials. They have to develop products for these materials and processes for handling them. Recyclable materials are often highly dispersed, and the cost of collecting them can be labor-intensive and expensive. They often are of low grade and contain impurities. Most manufacturing facilities are set up to use virgin materials. The purpose of source reduction is to eliminate waste before it is generated. The actual potential for source reduction is unknown. Businesses can modify their production processes to be less wasteful, and many have done so when it appears profitable. M and many other companies, for example, have had highly successful “Pollution Prevention Pays” programs. Businesses can modify their products to use less material and packaging. Consumers can change their lifestyles in many small ways. They can shop for goods that contain less packaging and use non-disposable alternatives when feasible.

Atmospheric Pollution Pollutants historically regulated by the US government are hydrocarbons, nitrous oxides, carbon monoxide, sulfur dioxide, and particulate matter (Marcus, ). Emitted from automobiles and smokestack industries like steel, chemical, and petroleum refining, they mainly threaten human health. Sensitive individuals are likely to suffer increased incidence of cardio-pulmonary diseases such as asthma under conditions of high exposure (Lave, ). Threats to the atmosphere from greenhouse gas buildup is somewhat different and in some ways more serious (Gore, ; Giddens, ). EPA only recently has tried to regulate greenhouse gases and its efforts are likely to be stymied by the Trump administration.

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Human activities of the past hundred years have altered the composition of the atmosphere, threatening global warming. Scientists are certain that warming has started and that it will get worse through the next century. Warming is caused by the greenhouse effect, the trapping of infrared energy, or heat, in the stratosphere by carbon dioxide and other greenhouse gases. These gases are transparent to sunlight, thus letting the energy penetrate to the Earth. Absorbing most of the sunlight, the Earth converts the light energy into heat. Some of the absorbed light is reflected back into space as heat. As it rises from the Earth, it strikes the carbon dioxide and other greenhouse gases. Some heat is reflected back toward the Earth, causing the warming effect. Major emphasis is placed on carbon dioxide, which is  percent of the problem. The major reason for the increase in carbon dioxide is the burning of fossil fuels—oil, coal, and gasoline. The other gases contributing to the greenhouse effect are methane, CFCs, nitrous oxides, and ozone. The atmosphere contains  percent more methane than it did during glacial periods. This increase is caused by the harvesting of rice paddies, the use of landfills, and the flaring of natural gas wells. CFCs emitted from the earth are found in the atmosphere at one part per billion. Nitrous oxides in minute traces are found in the atmosphere because of the use of fertilizers, natural processes, and the burning of fossil fuels. The last major gas that contributes to the greenhouse effect is ozone. Even though the ozone layer provides ultraviolet protection at high levels in the atmosphere, it is dangerous at lower levels, where it is more commonly known as smog. There are a number of natural processes that counteract the greenhouse effect. For instance, carbon dioxide is absorbed by the oceans and by tropical rain forests and other forms of vegetation. The oceans are considered to be the major sink for carbon dioxide which is readily dissolved into seawater and where aquatic plants absorb it and hold on to it. The quantity of carbon dioxide absorbed by the oceans is unknown. Because of the vastness of the oceans, scientists find it difficult to estimate the exact quantities of carbon dioxide plants absorb and of oxygen they produce through photosynthesis. The rate of absorption by terrestrial plants is estimated to be  billion tons of carbon dioxide annually worldwide. Because of deforestation, it could be decreasing rapidly. Unlike the oceans and the rain forests, clouds naturally counteract heat retention not by absorbing carbon dioxide but by reflecting sunlight back into space. If the light from the sun does not reach the Earth, heat cannot be created, and if the heat on the Earth’s surface does not go up, the greenhouse effect cannot occur. However, when light does reach the Earth, clouds reflect the heat back toward the Earth, thus warming it. Major uncertainty exists about the role of clouds in counteracting the greenhouse effect. Ultimately, this matter is extremely complicated because it depends on subtle distinctions about cloud thickness and structure. The greenhouse effect will have many effects on the world. Some of the predicted consequences are: • In Greenland and the North Pole, permafrost and ice will melt, causing the oceans to rise and threatening floods of coastal areas.

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• The Midwestern United States will be hit by drought conditions and the warmer weather will increase evaporation and cause drier soils. • With the increased evaporation, river levels will lower, causing a shortage in water supplies, lower generation of power, and a disruption in agricultural irrigation. • The nations of Central and Eastern Europe and Russia may gain some days in their growing season and the increased temperatures might cause a wider area of rain forest growth. A first approach to limiting carbon dioxide buildup is to make energy supply and use more efficient. Examples of available technology for conservation are efficient light bulbs in commercial buildings, better insulated buildings, and vehicles that obtain more miles per gallon. Another option to reduce the use of fossil fuels is to use different sources of energy. Alternatives such as nuclear power, hydropower, solar technologies, and natural gas produce far less carbon dioxide. A third method to reduce carbon dioxide buildup is to restrict deforestation of the world’s rain forests. Encouraging the reforestation of areas denuded of natural tree cover is also a gesture of some importance.

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.................................................................................................................................. Environmental problems pose numerous challenges for business and they have become part of ordinary decision-making in almost every company (Hoffman, ). Many well-regarded companies have taken actions such as the following (Marcus, ): • • • • • • • • • • • • • • • •

Cut back on environmentally unsafe operations Carried out R&D on environmentally safe activities Collaborated with environmentalists Complied early and worked with environmental agencies on innovative compliance programs Promoted innovative manufacturing solutions Encouraged product design changes Developed new product formulations Modified production equipment Eliminated waste, found alternative uses for it, and recycled it Created environmentally friendly products and services for consumers Tried to avoid unsubstantiated and inappropriate claims for the products and services (“greenwashing”) Tried to account for the payoffs they received from their antipollution programs Gave employees recognition for their contributions Worked with the socially responsible investment community Did their utmost to avoid liability Recognized the opportunities in progressive approaches to environmental protection

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Together these actions can be said to constitute a series of capabilities for strategic environmental management (SEM), wherein the firm tries to enhance its economic position while at the same time doing good for society. SEM is a win-win approach, an aspiration that can be held out for firms to achieve, but one that is difficult for all firms to reach (McWilliams and Siegel, ). It is to the difficulties of acquiring capabilities or SEM that this chapter next turns.

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.................................................................................................................................. SEM is about the aspects of environmental management that build competitive advantage at the same that they improve the environment (Starik and Marcus, ). Already mentioned examples are pollution prevention, which lowers a firm’s costs, and the introduction of environmentally friendly products and services that enable a firm to obtain premium prices. Pollution prevention is a way for companies to save money. Because pollution is a form of inefficiency—it indicates that scrap, harmful substances, and energy are not being used completely or effectively. Introducing new products is a way for companies to enhance their earnings. Companies can make big jumps in product development. Innovations are open in such areas as miniaturization, weight reduction, design for reuse, and reparability. Of course there are other business benefits from progressive environmental actions. They include reputational advantage, recruiting and retaining talented and motivated employees, recognition from the socially responsible investment community, cooperation with environmental groups, better community relations, positive media reporting, and lenience from regulators. From a strategic business perspective, though, capabilities like pollution prevention that lower cost and new product introductions that raise revenue are the important ones to strive for to elevate environmental management to a strategic level. These correspond to Porter’s generic strategies of low cost and differentiation (Porter, ). Thus they represent customer-centered values of bringing to customer the best valued products and services, products and services whose cost is lower because waste has been eliminated, and whose value is higher because they incorporate unique attributes. From a strategic point of view, the question is how do firms acquire such capabilities for SEM? To what extent can they gain an ability to carry out activities such as pollution prevention and new product development that improve the environment, while at the same time enhancing their bottom line? Existing research on the acquisition of competitive capabilities focuses on sources internal to the firm. For instance, Penrose () suggests that capabilities emerge as the unintended consequences of growth and expansion as managers find new uses for surplus resources. Chandler () argues that the knowledge and skills underlying capabilities are developed from trial-and-error learning, feedback, and evaluation in solving problems. This body

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of work portrays firms as generating capabilities through an incremental and path-dependent (Nelson and Winter, ) process of learning from experience. Other strategy researchers have examined how firms derive capabilities externally by learning from their inter-organizational ties. Through their participation in ongoing networks of alliances and exchange they gain access to network resources that assist them in the acquisition of new capabilities (Gulati, ). Network resources, a form of social capital found in the relations between firms (Coleman, ), permit firms to learn about new capabilities (Ahuja, ) and by means of absorptive capacities (Cohen and Levinthal, ) they use the new understandings they achieve to their advantage. Though these routes play a role in how firms acquire competitive abilities in such areas as pollution prevention and new product development, there is another model, one that is uniquely suited to the acquisition of SEM capabilities because these capabilities have different qualities than the types of capabilities firms typically acquire to enhance their competitive positions. The model presented here suggests that the drivers for the acquisition of capabilities in SEM consist of public policies, market forces, and the values and beliefs of managers. These then are filtered through psychological and organizational processes, which means that in each firm the process of acquiring SEM capabilities is different, as is the result. These factors lead to different firm responses to the challenges of environmental management. This model is one of pressures and response, with the question being how managers perceive, understand, and negotiate solutions in response to pressures. It is based on the assumption that system-wide institutional factors, embedded in government, markets, and values exert pressures on firms and contribute in significant ways to the acquisition of capabilities for environmental protection, like those in pollution prevention and new product development (Marcus and Geffen, ) and that psychological and organizational processes filter these pressures (see Figure .). The impact of these factors is two-way. They affect the acquisition of these capabilities and in turn are affected by the acquisition of the capabilities.

Public Policies

Markets

Psychological & Organizational Processes

SEM Capabilities

Values and Beliefs

 . The Acquisition of SEM Capabilities: The Reciprocal Effects of Public Policies, Markets, and Values and Beliefs Filtered by Psychological and Organizational Processes

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The sections that follow discuss the role of public policies, markets, and the impact of values and beliefs play in the acquisition of SEM capabilities.

Public Policies The capabilities firms have for SEM cannot be taken as given; managers in firms must develop them. For instance, they have to search for new ideas and methods, compare practices to the best in their industry, evaluate practices in other industries, and experiment. A dynamic capability is defined as “the capacity of a firm to renew, augment, and adapt its core competencies over time” (Teece et al., , ). Does the acquisition of SEM capabilities have a common antecedent in the same underlying dynamic capability that firms use to acquire business capabilities (Marcus and Anderson, )? Because business capabilities primarily yield private benefits that firms can fully appropriate, a dynamic capability is likely to lead to their acquisition. However, with regard to a capability in SEM, other causes are likely to bring it into existence; this is because it does not produce benefits solely for the firm. When the firm achieves a given level of environmental achievement, it cannot exclude those who do not pay for this benefit from enjoying it. The resulting gain is available to society at large and not just those directly tied to the firm. Environmental protection which results from SEM is a public good, whose full value a firm cannot entirely appropriate. Thus factors other than the dynamic capability that results in the acquisition of business capabilities are needed to motivate SEM acquisition. Government’s role therefore is obviously quite important. However, this connotes more than just regulation, or the control of negative environmental externalities. To capture the richness and complexity of the firm–government interface in the domain of environmental protection, the focus should be on a broad array of public policies that both encourage and discourage the firm doing various things. Whereas environmental regulation is restricted to legally binding mandates governments impose on firms and other polluters, environmental policy broadly conceived is made up of a much broader range of policies and programs that include not only regulations but voluntary government/industry agreements, joint research and development efforts, government information dissemination programs, grants, subsidies, transfers, taxes, and other initiatives that are often outside the boundary of a strict definition of environmental protection. For instance, these policies may include government efforts to promote regional business development, enhance job creation, accelerate GDP growth, and encourage different types of energy deployment. All of these policies have impacts on the firm and on the degree to which it considers gaining SEM capabilities to be in its interest. Firms will try to align their capabilities with the full spectrum of these policies. While considerations of bounded rationality (Simon, ) may restrict them to some degree, the managers of firms, if they clearly see the linkages between these policy types and

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their companies’ competitive advantage, actively try to manage the public policy interface to their benefit. The direction of the influence of public policies on firm acquisition of SEM capabilities, then, is reciprocal. Firms are affected by government policies in their choices to acquire SEM capabilities and they in turn impact public polices, in that government influence itself is an important SEM capability. The corporation’s involvement in the political and public policy-making process has an effect on the degree to which it acquires SEM capabilities (Marcus, ). Not only will firms participate in rule-making procedures with the goal of bringing about regulations that protect and exploit their capabilities in SEM and blocking regulations that threaten these capabilities (Stigler, ; Peltzman, ). They also will try to exert influence on a broad array of policies, some only indirectly related to the goals of environmental improvement. With regard to regulation, the argument that win-win solutions are achievable rests on the assumption that a shift is needed to make regulations more effective and efficient. There is a rich a literature on how to improve regulations so that win-win outcomes are more possible (Jaffe and Palmer, ). This literature generally agrees that less flexible regulation is likely to retard productivity, while more flexible regulation is likely to enhance it (Marcus, ). A large body of research supports this view. The first researcher to make this claim may have been Follet in , in a classic essay “The Giving of Orders,” where she argues that when given orders people should have the opportunity to think independently and show initiative (Follet, ). Indeed, many studies have shown that flexible rules have a positive effect on performance because they stimulate entrepreneurship, creativity, and risk-taking, while excessive procedures and rules stifle innovation (Eisenhardt, ). Flexible rules allow implementers to move beyond formal compliance to identification and internalization, with implementers having the flexibility to adapt and redefine policies as they proceed. When those that implement a policy play an active role in their design the results are likely to be better (Majumdar and Marcus, ). When implementers are given greater flexibility, they have greater knowledge of contradictory demands and conflicting imperatives at the point of delivery, and their performance therefore tends to be better. Criticisms of the system of US regulation point to the inflexibility of existing regulations as being a barrier to the acquisition of SEM capabilities. While the environmental regulatory system in the US has achieved considerable progress, even those with strong environmental values often view it as being costly and prescriptive, slow in issuing permits, focused on separate media rather than larger problems, and in need of updating to meet newly emerging problems (Marcus et. al., ). Most environmental protection laws and regulations, especially those pertaining to emissions to air and discharges to waterways set end-of-pipe technology-based standards based on the level of effectiveness of the particular pollution control devices available for a unique production process. Although alternative solutions can be employed, the regulatory outcome is far more certain if a company installs the best available control devices. Thus, innovations in P (the concept of reducing potential pollution at input

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stages rather than at the output stage) that reduce the use of toxic materials or internally recycle such materials are not properly recognized or encouraged within the current system and SEM capabilities not cultivated to a sufficient degree. Other criticisms of the system are insufficient local inputs and a paperwork burden that stifle change. Economists for a long period have been critics of the current US approach and have sketched elements of an alternative that might be more supportive of companies acquiring SEM capabilities (Dorfman and Dorfman, ). They have based their thinking on the idea that the full harm caused by pollution and other assaults on natural systems are not adequately incorporated into the price system. As a free good with no price, nature tends to be overused. To correct this defect in markets, economists have made many proposals that move away from rigid command-and-control regulation and toward flexible tax and market-based approaches where creativity and innovation are more common. Their model maximizes reliance on market mechanisms when allocation of resources is at stake. It imposes pollution taxes (or trading in pollution rights) in proportion to the harms caused by pollution. It establishes, to the extent possible, standards based on environmental outcomes and not on current technical solutions. It introduces rigorous harm-based standards responsive to the latest advances in scientific thinking; provides the public with clear, understandable information about the state of the environment, and allows stakeholders a greater role as watchdogs and guardians of the public interest. It breaks down the media-by-media focus of regulatory laws, rules, and enforcement so that environmental impact, production, and use can be understood holistically; and encourages lifecycle analysis, design for the environment, total product responsibility, and the adoption of other system-wide corporate SEM capabilities and approaches that would enable companies to achieve win-win solutions. With the acquisition of these capabilities, encouraged by this alternative approach to regulation, environmental protection would be a more integrated part of the management process. Companies would start with a product’s earliest design phase so that the environmental impact and natural resource demands of production, distribution, and consumption would be considered at an early stage along with market potential, costs of production and distribution, and servicing problems. To what extent would policies of this nature encourage the further acquisition of innovative environmental management capabilities? In theory, the concept of P, or reducing potential pollution at input stages rather than at the output stage, makes good economic sense. The goal is waste reduction. By increasing throughput, lowering rework rates and scrap, and using less material and energy per unit of production, a company can save money, enhance efficiency, and become more competitive. It can, in short, achieve a win for the environment and for the business enterprise. The US government, however, has long remained tied to end-of-pipe regulation that does not sufficiently encourage P. Changes in government regulation—right-to-know provisions and the Toxics Release Inventory (TRI) reporting program in the  Superfund Amendments— provided an initial impetus to P. In  Congress also passed the Pollution Prevention Act, which was designed to measure, coordinate, and assist in implementing

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P, but this Act just set up an information clearinghouse office that gave awards to small businesses, used enforcement agreements to commit violators to P, and conducted research. The US EPA tried a voluntary reduction program to get businesses to reduce seventeen chemicals including cadmium, chromium, nickel, and toluene  percent by  and  percent by . The purpose of EPA programs like Green Lights have been to get businesses to install energy efficient lighting. These changes in law did encourage many manufacturing firms to increase their SEM capabilities. They started P programs. The capabilities they acquired included inventorying wastes and releases, evaluating impacts, establishing and implementing reduction plans, and practicing outreach. The successful use of this capability required attention to product and process design, plant configuration, information and control systems, human resources, R&D, the suppliers’ role, and organization. Companies had to learn how to assemble teams for such activities. They needed measurement methods, they had to prepare process flow and material balance diagrams, and establish good tracking systems for waste. All of these are important elements in a capability for SEM. Operational and material changes then had to be considered including process and production changes and material substitutions. A frequent target of P programs was reduction of industrial solvents. For such programs to succeed, companies also had to better understand how to obtain employee involvement and give recognition. Despite the impressive efforts some firms made, this capability in SEM was not, and still has not been, fully adopted by most companies. There are a number of reasons. Despite the financial benefits, managers have viewed the capability as an extension of existing regulatory programs that they regard as costly and burdensome. Many believed and continue to believe their environmental accounting systems are not adequate to measuring the true costs and savings. Many consider the risks of changing production processes to be too high. Also, many are of the opinion that investments in P will yield less return than other investments that they view as being of greater strategic importance. The resistance and barriers are a result of the filtering of public policies that take place inside the firm. The policies had changed even if just slightly and were more accommodative of P and more encouraging of the adoption of capabilities of SEM. The public policies had undergone incremental adjustment but within firms psychological and organizational obstacles prevented greater acquisition of SEM capabilities. Public policies, therefore, though of utmost importance in the acquisition of SEM capabilities, can be stymied by how they are understood inside the firm. The market motive, next considered, also has to be very strong for SEM capabilities to be fully acquired by most firms, but the market motive, as will be shown, also has limits.

The Market Although the idea that the market positively encourages firms to develop capabilities in SEM has received much favorable attention, it remains controversial among some economists (Majumdar and Marcus, ). Standard economic assumptions

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(Jaffe et al., ) are that spending on environmental protection imposes significant costs on firms and slows their productivity growth. On the other hand, Porter and Van der Linde () among others have argued that environmental challenges, by inducing firms to economize, can improve their productivity. Based on the evidence from several case studies they concluded that environmental spending can, in fact, enhance a firm’s competitiveness. There now is a body of work that supports the idea that sometimes it “pays to be green” (e.g. Russo and Fouts, ). The market induces firms to move in this direction. Since Porter and Van der Linde (), many management scholars—too many to all be listed here—have explored these claims and offered frameworks for addressing the relationship between environmental protection and acquisition of capabilities in SEM. Much of the work relies on the resource-based view of the firm (RBV), from which the concept of capabilities comes. RBV has been extensively criticized for being an evocative description (Miller and Shamsie, ) instead of a series of logically deduced and tightly related falsifiable propositions. It has been noted that it is tautological in nature (Priem and Butler, ) with the distinctions between concepts being at best subtle and at worst imprecise. Though recognizing the limitations of RBV, management scholars have relied on it for ideas about SEM. Hart (), Shrivastava () Sharma and Vredenburg (), and Christmann (), for instance, show how SEM capabilities can provide firms with business and environmental advantages. Hart (), taking a natural-resourcebased view of the firm, argued that firm capabilities in SEM included P, product stewardship, and sustainable development. With the acquisition of these capabilities, firms could achieve competitive as well as environmental advantage. Shrivastava () argued that techniques and methods that minimized environmental impacts, reduced costs, and/or enhanced sales were the essential SEM tools by which firms could achieve competitive advantage. In a study of companies in the Canadian oil and gas industry, Sharma and Vredenburg () found that firms which took a proactive approach had unique organizational capabilities, such as stakeholder integration and continuous higher order learning and innovation. Christmann () demonstrated a link between environmental best practices and competitive advantage in the chemical industry based on the existence of complementary capabilities in process innovation and implementation. Often, however, there is confusion about the concepts in RBV. In RBV, the terms capabilities and competencies sometimes are used interchangeably. Though substituted for each other, the literature also suggests that there are significant differences between capabilities and competencies and resources (Prahalad and Hamel, ). Resources are mainly financial capital, labor, and physical property. Tangible, protected by legal rights, they have prices, and can be possessed and owned, transferred and traded, and bought and sold in the market. Capabilities are less measurable, analyzable, understandable, and tradable than resources; they cannot be as easily owned, transferred, bought, or sold. As they are the cumulative outcomes of historical processes, they resist social engineering, have more value in deterring competition, and are not easily

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acquired. Capabilities may be compared to recipes, software, and artistic sense and technique, while resources are ingredients, hardware, brushes, canvasses, and paint. Capabilities are “building blocks” which “aggregate” into competencies (Prahalad and Hamel, , ). They suggest potential, while competencies connote an achieved proficiency. Capabilities represent a system’s separate components, while a competency represents its realized whole. According to Prahalad and Hamel (, ), companies’ competencies are based on many capabilities. There may be thirty or more capabilities in a firm but less than five or six competencies. Competencies allow a company to tie together its complementary and co-specialized capabilities. They provide for synergy among closely connected and supportive elements. They also make significant contributions to perceived customer benefit, and provide potential access to many markets. Since they involve a complex harmonization of capabilities, they are hard to imitate. Indeed, the more complex the integration of separate capabilities, the more difficult it is to comprehend or copy a company’s competencies and the easier it is for a firm to establish and sustain a competitive position for a long period. A distinction therefore should be drawn between the separate capabilities that constitute SEM and its realized competence for SEM. Companies may acquire quite a few SEM capabilities, but not have a realized competence if these capabilities are not well-integrated. The partial acquisition of capabilities and their limited integration is typical in many companies. Almost all companies today have acquired many SEM capabilities but few of them have put them together and created a unique competence that establishes a valuable competitive position that is hard to imitate, reproduce, or duplicate. The many capabilities companies acquire are constituent capabilities. They could be brought together as a full-blown SEM competence but they generally are not. The capabilities companies acquire include P and toxic reduction, full cost analysis, auditing, design for the environment, product stewardship, industrial ecology, total quality environmental management, collaboration with environmental and other nongovernmental organizations, ties to trade associations, relationships with other firms, policy formalization in various statements and reports, and CEO and board involvement. How these elements relate and cohere, how they are built up over time and come together to form in overall competence is missing. Thus, the market tends to positively induce firms to acquire some SEM capabilities partially and gradually. In the retail food industry, for instance, what has taken place is the gradual building of SEM capabilities. The practices include newspaper, plastic, and paper recycling. To these practices others might be added. A grocer might engage in advanced recycling (recycling of wooden pallets, cooking oil, meat/ fat/bones, or plastic bags). It could become involved in consumer education and offer environmental products for sale. It might provide training to its managers and employees. Its employees might be asked to use such techniques as systematically collecting and reporting information on the grocer’s wastes and energy usage. The process through which the acquisition of these SEM capabilities takes place is difficult to reconstruct because it is based on idiosyncratic, trial-and-error efforts. Firms

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develop capabilities by accident rather than planning (Collins and Porras, ), learning from failure as much as from success. Effective implementation depends on the existence of associated but often tacit complementary assets even if the practices and techniques underlying them are formally and explicitly defined. In sum, many firms have made gradual progress toward competence in SEM over time as they acquire capabilities in response to diverse market contingencies. However, the capabilities rarely aggregate to a fully developed SEM competence. Market forces are very good at bringing about the partial acquisition of various SEM capabilities but they are filtered through psychological and organizational processes that fail to yield a higher level SEM competence. Most companies’ SEM capabilities do not really stand out.

Values and Beliefs Legal compliance and economic advantage by themselves only drive firms so far in the acquisition of SEM capabilities. On the one hand, the public policy process gives firms little choice. Regulation compels firms to make these investments. Laws coerce them. They have to comply with legal dictates. Investments in environmental protection also can have a positive impact on the corporate bottom line. Still, environmental investments compete with other investments that might appear to offer more certain or higher returns. Beyond the public policy process and profit, there have to be other motives for managers to make investments in SEM capabilities. Another possibility is that these investments are made because a sufficient number of influential managers in the firm believe that it is the “moral” or “ethically right thing” to do. Ethical obligations are reflected in how managers define their firms’ missions. Some firms’ missions are narrow and focused, with the main concern being profitability. However, other firms have broad missions that are inclusive of different stakeholders and their needs. Community relations, customer welfare, and employee morale may be among these firm’s top priorities. If a firm’s mission is narrow, it may not even engage in basic SEM capability acquisition, but if it is broad it may go much further in acquiring these capabilities. The relationship between a firm’s mission and its acquisition of SEM capabilities needs to be further explored. From where do managers acquire values and beliefs that lead them to try to acquire SEM capabilities? Actions to educate key business stakeholders may bring them to a belief in SEM. The more that they act to educate key business stakeholders, the more their values and beliefs are likely to grow, resulting in greater SEM capability acquisition (Marcus and Anderson, ). By engaging in actions to convince key business stakeholders, individuals firm up their own convictions and build confidence in the rightness of their values and beliefs. Their actions reinforce the values and beliefs and the values and beliefs in turn reinforce the actions in a recursive cycle.

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   

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As Salancik (, ) writes, commitment is “a state . . . in which an individual becomes bound by his (or her) actions.” This reasoning is supported by the literature on institutionalization and structuration: as Barley and Tolbert (, ) argue, the “web of values, norms, rules, beliefs, and taken-for-granted assumptions” in which people “are suspended” are of people’s “own making.” In trying to educate key business stakeholders, proponents of the environment may come to believe in associated environmental values. Competing for legitimacy (Aldrich and Fiol, ), they rely on rhetoric—consistent stories, encompassing symbolic language, and behaviors to enhance the legitimacy of their activities. They use their powers of persuasion to overcome resistance and skepticism, their own and that of others. Values and beliefs can play a large role in the capability some firms have acquired in commercializing green products and services. An example is in the area of energy efficiency and renewable energy (EERE). These products and services would help consumers save or replace traditional forms of energy such as oil, coal, natural gas, and nuclear power (Marcus and Cohen, ). They include manufacturers whose products or services save energy in residential or commercial buildings (e.g. energy efficient windows, lighting components, insulation materials, and appliances); save energy in industrial processes or settings (e.g. process controls, thermostats, heat recovery systems, and ventilators); reduce energy use in commercial buildings or industrial settings (e.g. demand side management programs, energy audits, training and software for energy systems); and/or produce renewable energy or alternate fuel products (e.g. photovoltaic products, wind power systems, and whole tree biomass systems). While some EERE businesses consist of new firms, others are new businesses within larger, more established firms, but even as new businesses within larger firms they represent ventures that are entrepreneurial in nature and are subject to the forces that affect startup firms. Unlike other promising products and services, many EERE business have not fully taken off. Some of the reasons are relatively low energy prices for conventional fuels, pullbacks in government subsidies, and less than robust consumer demand. Other factors involve performance uncertainties, high costs, and insufficient development of infrastructure and supporting industries that have to supply valuable inputs and assist in manufacturing, distribution, marketing, and sales. For EERE businesses to evolve and move through stages of growth and achieve business maturity the people involved might have to rely on values and beliefs that are not entirely rational, what Keynes calls animal spirits. For any business to move from initiation to takeoff, the process is long and patience is needed. Klepper and Grady (), for instance, found that some businesses moved from origin to takeoff in just two years while others took more than fifty years. The average time to move from initiation to takeoff was twenty-nine years and the standard deviation was fifteen years, suggesting that people involved need considerable commitment. What sustains this commitment to EERE businesses and to green products and services in general if not values and beliefs filtered by psychological and organizational processes?

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

 

C

.................................................................................................................................. To sum up, environmental management is a key business function as a result of the unwanted wastes that are inevitably produced in the course of bringing products and services to customers. Four challenges to effectiveness in environmental management have been discussed: public attitudes, environmental movement pressures, the limitations of economic analysis, and the shortcomings of scientific and technical information. Two examples have been used to illustrate these challenges—solid wastes and atmospheric pollution. Steps firms have taken to better manage the environment have been presented. These factors constitute a series of environmental management capabilities which when brought together might constitute a competence in SEM wherein both the firm and society gain from less waste and product innovation. SEM is understood in this chapter as a goal to which some firms might aspire. Almost all firms are at least partially on this journey. Factors that influence their ability to acquire full-fledged capabilities in SEM—where they can both achieve financial benefit from the environment and benefit society—have been examined. These factors are the set of public policies with which firms have to deal, the market forces that entice them to move in this direction and acquire these capabilities, and the values and beliefs that lead them in this direction even if the law does not compel them and the prospect of economic gain is not certain. Throughout this chapter the intention has been to convey the idea that environmental management within firms is an evolving aspect of corporate responsibility, wherein much progress has been made, but much more progress could be made. The degree of progress that gets achieved has been filtered through psychological and organizational processes within the firm. To conclude the chapter, acquiring SEM capabilities is important, as it can mean less waste, fewer emissions, less accidents, lower costs, and better integrated management systems. To the extent that these capabilities are tacit, casually ambiguous, rare, firmspecific, and add value to customers through product differentiation or lower costs, they can provide firms with competitive advantage. Indeed, many companies have made advances in reconciling their business and environmental goals through the acquisition of SEM capabilities. They have started to create “win-win” solutions where being “green” rather than a cost of doing business has become an impetus for lowering costs and developing new market opportunities and innovation. However, these instances of winwin outcomes are not easy to realize since the acquisition of SEM capabilities is fraught with many obstacles, which have also been identified in this chapter.

R Ahuja, G. . Collaboration networks, structural holes, and innovation: A longitudinal study. Administrative Science Quarterly, (), –. Aldrich, H. E., and Fiol, C. M. . Fools Rush in? The Institutional Context of Industry Creation. Academy of Management Review, (), –.

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Nelson, R. R., and Winter, S. G. . An Evolutionary Theory of Economic Change. Cambridge, MA: Belknap Press of Harvard University Press. Peltzman, S. . Toward a more general theory of regulation. Journal of Law and Economics, (): –. Penrose, E. T. . The Theory of the Growth of the Firm (th ed., rev.). Oxford and New York: Oxford University Press. Porter, M. E. . Competitive Strategy: Techniques for Analyzing Industries and Competitors: With a New Introduction (st Free Press ed.). New York: Free Press. Porter, M. E., and van der Linde, C. . Toward a new conception of the environmentcompetitiveness relationship. Journal of Economic Perspectives, (), –. Prahalad, C. K., and Hamel, G. . The core competence of the corporation. Harvard Business Review, (), –. Priem, R. L., and Butler, J. E. . Is the resource-based “view” a useful perspective for strategic management research? Academy of Management Review, (), –. Russo, M. V., and Fouts, P. A. . A resource-based perspective on corporate environmental performance and profitability. Academy of Management Journal, (), –. Salancik, G. R. . Commitment is too easy! Organizational Dynamics, (), –. Sharma, S., and Vredenburg, H. . Proactive corporate environmental strategy and the development of competitively valuable organizational capabilities. Strategic Management Journal, (), –. Shrivastava, P. . The role of corporations in achieving ecological sustainability. Academy of Management Review, (): –. Simon, H. A. . Bounded rationality and organizational learning. Organization Science, (), –. Solow, R. M. . The economics of resources or the resources of economics. In C. Gopalakrishnan (ed.), Classic Papers in Natural Resource Economics, –. London: Palgrave Macmillan. Starik, M., and Marcus, A. A. . Introduction to the special research forum on the management of organizations in the natural environment: A field emerging from multiple paths, with many challenges ahead. Academy of Management Journal, (), –. Stigler, G. J. . The Citizen and the State: Essays on Regulation. Chicago: University of Chicago Press. Teece, D. J., Pisano, G., and Shuen, A. . Dynamic capabilities and strategic management. Strategic Management Journal, (), –. Wilson, J. Q. . The politics of regulation. In T. Ferguson and J. Rogers (eds), The Political Economy: Readings in the Politics and Economics of American Public Policy, –. Armonk, NY: M. E. Sharpe, Inc.

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  ......................................................................................................................

         Camera or Mirror? ......................................................................................................................

    

W an organization’s environmental management, defined as the “degree to which a firm harms or helps the natural environment” (Berchicci and King, , ), has beneficial economic consequences is important for not only the focal organization, but also society and Nature. A reinforcing relationship between corporate environmental performance (CEP) and corporate financial performance (CFP) would imply that firms can benefit financially from green management, which in turn may spur greater investments in beneficial environmental actions (Marcus and Fremeth, ), for example, pollution abatement technologies or programs that stop illegal wildlife trade and, thus, protect biodiversity (e.g. WildAid). In other words, a positive association implies that it pays for corporations to go green. Economic payoffs from green management could help foster greater investments in research and development (R&D), which may then result in even more beneficial sustainability innovations (Marcus, ). So, what recent studies, in aggregate, suggest about the linkage between environmental and financial performance for the average firm may be highly informative (despite the metatheoretical caveats noted at the end of this review). Most recent studies and meta-analyses identify a relatively small, positive relationship between CEP and CFP (Dixon-Fowler et al., ; Guenther et al., ; Horváthová, ; Orlitzky et al., ). At the same time, some individual studies also suggest that higher CEP may lead to financial losses for the firm or destroy market value (e.g. Makni et al., ; Van der Laan et al., ). Finally, some researchers report mixed relationships between CEP and CFP, which may be due to curvilinear

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   



associations (Trumpp and Guenther, ; Wagner, ; Wagner and Blom, ) or the contingency factors discussed (later) in this review. An important contingency factor that has undoubtedly resulted in these heterogeneous findings is the fact that studies utilize different operational definitions (i.e. measures) of both the broad concept of CEP and the broad concept of CFP (Orlitzky et al., ).¹ The greater the heterogeneity of measures (in either construct), the more contradictory the empirical conclusions (Meyer and Gupta, ). That is, different CFP measures show different associations with specific CFP dimensions (Peloza, ). This literature review about the theoretical and empirical associations between CEP and CFP that have been identified since  follows this structure: First, we review several possible causal mechanisms linking both aspects of organizational performance theoretically. Second, we present the overall empirical evidence, focusing on findings generated between  and  because of earlier influential reviews (Ambec and Lanoie, ; Berchicci and King, ; Hart and Ahuja, ; Russo and Minto, ). Third, we focus on the different operationalizations of CEP and highlight the relevance of these measurement differences for the CEP-CFP relationship. The review concludes with the potential confounding impact of institutional logics among social scientists studying the CEP–CFP link. The consequence of the existence of these logics is: while individual studies seem to report objective results—that is, they examine the CEP–CFP relation from an unbiased (“camera”) perspective, one may also surmise, looking at the research community as a whole, that the findings may mirror social scientists’ selfperceptions and legitimization efforts (see also MacKenzie, ).

T U

.................................................................................................................................. Scholars with an interest in identifying a positive relationship between CEP and CFP mainly draw on three theoretical frameworks: the (natural) resource-based view (Barney, ; Hart, ), the industrial organization literature (Porter, ; Porter and van der Linde, ), and instrumental stakeholder theory (Cornell and Shapiro, ; Donaldson and Preston, ; Freeman, ). All three arguments run counter to the tradeoff hypothesis, which is rooted in neoclassical economics (Friedman, ; Jensen, ) and predicts a negative CEP–CFP relationship. Table . provides an ¹ Andy Hoffman calculated in July  (in a blog for the ONE Division of the Academy of Management) that, in a list of the seventy-five most cited seminal articles in the field of Business and the Natural Environment, Orlitzky et al.’s () meta-analysis was ranked # in terms of normalized citation counts by year. In the meantime, the Orlitzky et al. () meta-analysis has become the most highly cited article ever published in Organization Studies, garnering more than double the citations of the second-most highly cited article in this EGOS journal. More specifically, as of Jan. , this article was cited , times on the Web of Science/Social Science Citations Index (SSCI), while the most cited articles of  in Academy of Management Journal (AMJ) and Academy of Management Review received  and , citations, respectively. Only one AMJ article published since  (i.e. Eisenhardt and Graebner, ) has had greater scientific impact than this meta-analysis.

Table 13.1 Recent Studies Investigating the CEP-CFP Relationship (Organized by Main Theoretical Underpinning)

Sample

CEP measures

CFP measures

Empirical observations

Natural resource-based view of the firm (NRBV) or resource-based view (RBV) Aragón-Correa et al., 2008

ROI, earnings growth 108 Spanish SMEs in Environmental relative to the automotive management score based sector on pollution prevention and competitors eco-efficient practices

Firms with the most proactive practices exhibited a significantly positive CFP.

Clarkson et al., 2011

Toxic emissions efficiency 242 US firms from pulp and paper, chemical, oil and gas, metals and mining Industry

ROA, operation cash flows

Positive (negative) changes in firms’ financial resources in the prior periods are followed by significant improvements (declines) in firm’s relative environmental performance in the subsequent periods. In addition, significant improvements (declines) in environmental performance in the prior periods can lead to improvements (declines) in CFP in the subsequent periods after controlling for the impact of Granger causality.

Darnall et al., 2008

4,188 global manufacturing firms

Institutional Profitability performance, growth theory performance

Facilities that were motivated to adopt more comprehensive environmental management systems because of their complementary resources and capabilities (as opposed to institutional pressures) observed greater overall facility-level business performance.

Kurapatskie and 48 US Darnall, 2013 manufacturing firms from the Dow Jones Sustainability Index

Environmental management score based on environmental practices

Environmental performance Firms’ reported value score based on the number of financial benefits associated with their of activities reported sustainability activities

Higher-order sustainability activities (those that develop new processes and products) show greater positive association with financial benefits than lower-order sustainability activities (modifications of existing products and processes).

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Study

Other theories(if study draws on more than one theory)

Nishitani et al., 2011

426 Japanese manufacturing firms

Nikkei Environmental Management Survey Pollution reduction rate

Value added

Industrial organization literature

Firms that have reduced their pollution emissions can increase their economic performance through the increase in demand for their products and an improvement in productivity.

Sharfman and Fernando, 2008

267 US firms from S&P 500

EPA TRI data KLD

Weighted average cost of capital (WACC)

Risk management theory and institutional theory

Environmental risk management is associated with lower cost capital, resulting in benefits related to lower cost of equity capital, shift to debt financing, and higher tax benefits.

Industrial organization literature 89 Fortune 500 firms Absolute CO2 emissions with CO2 emission reports for 2006/ 2007

ROA, ROE

Generally nonsignificant results (with one year showing negative association between CO2 emission variation and ROA).

Eiadat et al., 2008

119 Jordanian firms in the chemical industry

Environmental management score based on information about hazardous or toxic waste, environmental investments, environmental management initiatives, and air/water pollution prevention

Sales growth, market share, ROI

Environmental innovation strategy is associated with improved perceived firms’ business performance. In addition, environmental innovation strategy fully mediates between certain environmental pressure forces and firms’ business performance.

Flammer, 2013

US firms; 117 ecofriendly and 156 eco-harmful events

Eco-friendly events or eco-harmful events, environmental performance score based on KLD

Stock market reaction: average cumulative abnormal return

Stakeholder theory and resource-based view

Companies reported to behave responsibly toward the environment experience a significant stock price increase, whereas firms that behave irresponsibly face a significant decrease. In addition, between 1980 and 2009, the negative stock market reaction to ecoharmful behavior has increased, while the positive reaction to eco-friendly initiatives has decreased. (continued )

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Alvarez, 2012

Table 13.1 Continued

Empirical observations

Study

Sample

CEP measures

CFP measures

Horváthova, 2012

136 Czech firms

Toxic emissions intensity, EMAS or ISO 14001 certification

ROA ROE

While the effect of environmental performance on CFP is negative for environmental performance lagged by 1 year, it becomes positive for 2-year lag.

Molina-Azorín et al., 2009

301 Spanish hotels

Environmental management score based on environmental practices

Occupancy rate per room, gross operative profit,10 performance variables (relative to competitors)

Hotels showing a stronger commitment to environmental practices exhibited higher CFP. Environmental practices seem to be positively associated with several performance indicators.

Russo and Pogutz, 2009

177 global firms from the Global Fortune 500 index

Total GHG emissions

ROA, ROE, ROS, Tobin’s q

Corporate environmentalism was found to be correlated with improved CFP in the short term. However, corporate growth correlated with increased emissions.

Sinkin et al., 2008

90 eco-efficient firms and 341 firms in the control group based on the 2003 Fortune 500 list

ISO 14001 certification, issuance of a corporate environmental report

Market value

Findings support the proposition that implementation of eco-efficient business strategies is associated with higher firm value.

Trumpp and Guenther, 2015

696 global firms from manufacturing and service industries

GHG emission intensity, waste intensity

ROA, total shareholder return

Neoclassical economics, (natural) resource-based view, and stakeholder theory

There is a U-shaped, relationship between carbon performance and profitability as well as between waste intensity and profitability. The same result holds for the relationship between carbon performance and stock market performance, but only for manufacturing firms.

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Other theories(if study draws on more than one theory)

Zeng et al., 2010 125 Chinese firms listed in the Directory of Audited Enterprises of Cleaner Production

Environmental performance Profitability, increase Resource-based view rate of net profit, score based on cleaner ROE production activities

Cleaner production has an overall positive association with a firm’s business performance. Structural equations modeling also showed the cleaner production activities of low-cost scheme had a bigger contribution to CFP compared to nonfinancial performance, while cleaner production activities of high-cost scheme had a greater contribution to nonfinancial performance, compared to CFP.

Stakeholder theory

Iwata and Okada, 2011

268 Japanese manufacturing firms

Total GHG emissions, total waste emissions

ROA, ROE, ROI, ROIC, ROS, Tobin’s q

Neoclassical economics and industrial organization literature

When using carbon emissions as an outcomebased measurement, corporate environmental performance seems to pay off. Conversely, when using carbon management as a process-based measurement, a negative relationship between corporate environmental performance and CFP is identified. Waste emissions do not generally have significant effects on CFP. On the other hand, greenhouse gas reduction leads to an increase in CFP in the whole sample and clean industries, although it does not have significant effects on CFP in dirty industries. Furthermore, as the firm growth rate increases, the partial effects of waste emissions on CFP decrease, whereas the partial effects of greenhouse gas emissions on CFP increase. (continued )

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ROA, ROE, Tobin’s q Busch and 174 firms of the Dow GHG emission intensity, Hoffmann, 2011 Jones Global Index environmental management score based on carbon management strategies

Other theories(if study draws on more than one theory)

Empirical observations

Study

Sample

CEP measures

CFP measures

Misani and Pogutz, 2015

127 global firms disclosing their GHG emissions through the Carbon Disclosure Project

GHG emission intensity, environmental performance score based on Asset4

ROA, ROE, ROS, Tobin’s q

Firms achieved the highest CFP when their carbon performance was neither low nor high, but intermediate. In addition, environmental processes moderated this relationship as they reinforce firms’ financial performance through improved stakeholder management.

Moneva and Ortas, 2010

230 European firms

Environmental disclosures, programs to reduce environmental impacts and energy consumption

ROA, ROE, profit margin, cash flow, operating profits

Enterprises that obtained higher rates of environmental performance show higher CFP in the future.

Van der Laan et al., 2008

Firms in the S&P 500 KLD

ROA, EPS

Prospect decision Environmental performance was inversely related to both CFP measures. theory and resource dependence theory

Whaba, 2008

156 firms from Egypt ISO 14001 certification

Tobin’s q

Resource-based view

Environmental responsibility exerted a positive and significant coefficient on the firm market value.

ROA, Tobin’s q

Industrial organization literature

Increasing carbon emissions positively impacted financial performance when using accounting-based measures (ROA), while they negatively impacted market-based measures (Tobin’s q).

Neoclassical economics Delmas and Nairn-Birch, 2011

1,200 US firms

Total GHG emissions, direct GHG emissions, supply chain GHG emissions

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Table 13.1 Continued

Kim and Statman, 2012

US firms rated by KLD

Environmental performance ROA, Tobin’s q score based on KLD

The behavior of corporations seems consistent with the claim that they act in the interest of shareholders, increasing or decreasing their investment in environmental responsibility as necessary to improve their financial performance.

Makni et al., 2009

179 Canadian firms

Environmental performance ROA, ROE, stock score based on CSID market returns

A robust significant negative impact of the environmental dimension of CSP and three measures of FP, namely return on assets, return on equity, and market returns.

Ragothaman and Carr, 2008

90 of the US “top 100” corporate polluters based on TRI disclosures

Waste disposal

Tobin’s q

Toxic air release was a significantly negative predictor of Tobin’s q.

Sueyoshi and Goto, 2009

167 US electric power utilities

Investment in environmental protection facilities (%) environmental protection cost (%)

ROA

Nonsignificant (positive) impact of environmental investment on financial performance.

Other studies

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

    

overview of the main theories, the samples used, the choice of CEP and CFP measures, and the main findings in recent empirical studies ( onwards). Notably, this table is not broken down by the direction of the findings. If the table were organized this way, the reader might conclude that counting positive or negative findings is an appropriate summary of the aggregate evidence. It is not. In fact, statistical experts commonly regard such vote counting as one of the most severe errors in integrative research summaries (Borenstein et al., ; Cooper et al., ; Hedges and Olkin, ; Hunter and Schmidt, ; Orlitzky et al., ). We opted to organize the studies by theoretical blocks instead, as discussed next.

The (Natural) Resource-Based View From the perspective of the resource-based view of the firm (RBV), organizations can realize a sustainable competitive advantage and, consequently, higher financial performance if they are able to develop valuable, rare, imperfectly imitable, and nonsubstitutable resources and capabilities (Barney, ). The natural-resource-based view (NRBV) extends the RBV by highlighting the role of those capabilities that increase the firm’s ability to cope with environmental constraints and risks (Hart, ). Thus, “innovative environmental strategies can lead to the development of firmspecific capabilities which can be sources of competitive advantage” (Sharma and Vredenburg, , ). In short, the NRBV argues for connections between firms’ care for the external natural environment and their internal resources and capabilities. Hart () initially introduced three interconnected strategies, which Hart and Milstein () extended by developing a sustainability value framework that links global sustainability challenges to the creation of shareholder value. They introduced four interconnected CEP strategies, which help firms tackle sustainability challenges and increase business benefits at the same time: () pollution prevention, () product stewardship, () clean technology, and () sustainability vision. Pollution prevention aims at increasing resource efficiency of business activities in order to reduce waste and emissions proactively instead of cleaning up afterwards with costly end-of-pipe solutions (De Stefano et al., ). Product stewardship integrates environmental concerns into the product design process in order to minimize negative ecological impacts along the lifecycle of the product. While product stewardship is often referred to as (relatively) incremental innovation, the third strategy, clean technology, seeks to leapfrog standard routines and knowledge. This strategy involves radical changes of technology, markets, and consumer behavior. The fourth strategy, the formulation of a sustainability vision, can be understood as a shared roadmap for meeting unmet needs. This might enable firms to unlock previously unserved markets of immense scale and scope (Hart and Milstein, ). In sum, if firms are able to develop relevant capabilities successfully, they can obtain a competitive advantage and, ultimately, financial benefits from greater CEP. Based on the RBV, Darnall et al. () argue that the adoption of an environmental management system (EMS) requires organizations to develop knowledge-based

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

skills—which are difficult for competitors to replicate—since information-sharing and joint problem-solving among employees are necessary for addressing environmental problems. Moreover, they find evidence that firms whose CEP is mainly driven by their resources and capabilities, for example, in the context of environmental R&D, are more likely to improve business performance. In another study, Kurapatskie and Darnall () examine how different strategies of sustainability activities, based on Hart and Milstein’s () framework, are related to economic benefits. Their empirical evidence indicates that higher-order sustainability activities (i.e. clean technology and community focus) yield higher financial benefits than lower-order sustainability activities (pollution prevention and product stewardship). In a related vein, Clarkson and his colleagues () find that a proactive environmental strategy can be associated with improved future CFP. However, since not all firms can mimic such a proactive strategy, but only those with sufficient financial resources and management capabilities, they show that the relationship between CEP and CFP is consistent with the RBV. Within the specific context of small and mediumsized enterprises (SMEs), Aragón-Correa et al. () identify three organizational capabilities that are positively associated with the development of proactive environmental strategies: shared vision, stakeholder management, and strategic proactivity. The authors find evidence that, for SMEs, the pursuit of a proactive environmental strategy shows a positive and significant relationship with CFP.

Industrial Organization Literature The question of how CEP affects a firm’s CFP can also be answered from a marketbased perspective. This view presumes that competitive advantage results from the external market structure and the firm’s relative position within the industry (Porter, ). Five forces (rivalry, threat of new entrants, supplier power, buyer power, and substitutes/complements) determine how economic value is allocated to firms embedded in particular industry structures. To circumvent the five forces, those firms that set or modify the rules of the competitive game within their industry are in the best competitive position (Brandenburger and Nalebuff, , ). In order to become more competitive, firms can pursue two basic generic strategies: cost leadership and differentiation (Porter, ). Since pollution is often a sign of inefficient resource use within the production process, reducing the ecological impact of a firm does not necessarily contradict profitability, but instead may offer opportunities for cost reductions (Porter and van der Linde, ). Moreover, certain environmental characteristics of products and services or a convincing environmental strategy might have a positive influence on customers’ willingness-to-pay and buying preference (Guenther and Hoppe, ). Based on this underlying theoretical logic, Orsato () developed a framework for categorizing four generic types of competitive environmental strategies. When firms compete in many market segments they can gain competitive advantage either from lower costs by applying the strategy of

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

    

eco-efficiency or from differentiation through a beyond-compliance leadership (Orsato, ). If firms, on the other hand, pursue a focus strategy, lower costs can be achieved via the strategy of environmental cost leadership, whereas focused differentiation is accomplished through an eco-branding strategy. With regard to government interventions, Porter and van der Linde () argue that properly designed regulations can stimulate innovation and “lead to absolute advantages over firms in foreign countries not subject to similar regulations” (p. ). Thus, according to Porter and van der Linde (), enhancing CEP can result in a win-win situation for society and firms alike. Against this theoretical background, Sinkin et al. () test whether the adoption of eco-efficient business strategies is positively related to firm value. They find evidence that firms with an eco-efficient business strategy (i.e. Fortune  firms with ISO certifications and corporate environmental reports) have higher market valuations than firms without such strategic commitments to the natural environment. In addition, Molina-Azorín et al. () examine the link between CEP and CFP in the Spanish hotel industry. Their study shows that CFP increases with higher levels of proactivity toward environmental management, due to product differentiation and cost savings. While environmental practices allow hotels to save costs related to their resource, water, and energy consumption, they can meet the demand of a growing number of environmentally conscious tourists at the same time. This, in turn, can contribute to hotel revenue growth and, thus, to superior CFP. Similarly, the results of Russo and Pogutz () provide support for the claim that “customers’ increasing willingness to pay for environmentally oriented companies, and the awareness on climate change generate market opportunities in terms of margins per unit of sales” (p. ).

Instrumental Stakeholder Theory Stakeholder theory suggests that addressing and managing the expectations of relevant stakeholder groups is key for a firm’s success and long-term viability (e.g. Cornell and Shapiro, ; Donaldson and Preston, ; Freeman, ). Relevant stakeholders include investors, customers, employees, the government, the media, or non-governmental organizations (environmental activists). Regarding environmental issues, different stakeholders might expect managers to integrate ecological factors into the corporate strategy. Thus, CEP can be considered a firm’s attempt to meet these stakeholder demands. In this way, a firm can improve its reputation and support among its stakeholders (Orlitzky et al., ). Better stakeholder relations may manifest in greater customer loyalty (Eiadat et al., ), greater socially responsible investments driving up the firm’s share price (Busch and Hoffmann, ; Orlitzky, ), and the attraction and retention of talented employees (Cable and Turban, ; Hart and Ahuja, ; Turban and Greening, ). Also, by enhancing CEP, firms may be able to preempt costly stakeholder conflicts (Hull and Rothenberg, ). Thus, following this instrumental stakeholder management perspective (Jones, ), it can pay off

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

for firms to enhance CEP because ignoring stakeholder expectations can harm a firm’s reputation. Moneva and Ortas () find support for this instrumental stakeholder argument in their study of  European companies. Analyzing CEP and CFP in a partial least squares (PLS) model, they find a positive and significant relation between CEP and CFP. They conclude that, by increasing CEP, business executives can improve their overall efficiency, more effectively respond to the demands of their stakeholders, and stabilize their CFP. Similarly, Whaba () finds support for the positive CEP–CFP relationship hypothesized by instrumental stakeholder theory. The study reveals that firms with a higher CEP are rewarded by the market—reflected in a positive and significant relationship between CEP and Tobin’s q.

Neoclassical Economics Whereas the former three theories provided arguments supportive of the business case for CEP, the tradeoff hypothesis of neoclassical economics predicts CEP to contradict profit maximization (Friedman, ; Jensen, ). According to this argument, environmental investments raise firm expenditures and draw financial and other resources away from core areas of business, resulting in an economic disadvantage in the marketplace. Consequently, a negative relationship between CEP and CFP is proposed, which runs counter to the theory proposed by the NRBV, industrial economics, and instrumental stakeholder theory. In recent years, only a few studies have been published that were based on neoclassical economics supporting the tradeoff hypothesis. For example, Makni et al. () investigate the impact of general corporate social performance on CFP within a sample of  publicly held Canadian firms. For the environmental component of their corporate social performance construct, they find a robust unidirectional and negative relationship with three measurements of financial performance (ROA, ROE, and share price returns), consistent with the tradeoff hypothesis. Van der Laan et al. (, ) agree with this argument: “a good reputation for being concerned with the environment leads to real monetary losses.”

Theoretical Extensions Nonlinear relationships The four aforementioned theoretical underpinnings generally assume a linear (positive or negative) CEP–CFP relationship. By combining the different explanations for the direction of the relationship, researchers have extended these theories by proposing nonlinear relationships (Wagner, ; Wagner and Blom, ). In this regard, Trumpp and Guenther () argue that CEP may cause negative financial outcomes

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

    

when it goes beyond a certain level. Thus, the relationship is best represented by an inverted U-shape. On the other hand, U-shaped links imply that financial outcomes are only maximized at minimum and maximum levels of CEP; all CEP medium efforts in between are thus suboptimal from a financial point of view (Barnett and Salomon, ). Both the inverted U-shape and the U-shape integrate the win-win hypothesis for a positive association and the tradeoff hypothesis for a negative relationship—but in different ways (Trumpp and Guenther, ).

Contingency factors Many recent studies deal with different contingency factors that moderate the CEP–CFP relationship. The following moderators, among others, have been analyzed: industry growth, organization size, level of diversification, R&D, government sales, consumer income, labor market conditions, stage in the industry lifecycle, innovation, stakeholder groups, advertising intensity, issue materiality and measurement level, regional differences, industry type, durations of the studies, business strategy, firm rivals’ costs, risk, and total quality management initiatives (see e.g. Albertini, ; Busch and Hoffmann, ; Guenther and Hoppe, ; McWilliams and Siegel, ; Orlitzky, ; Russo and Fouts, ; Wagner, ). The wide range of potential contingency factors highlights the fact that it is important not to omit relevant moderator variables when studying the CEP–CFP relationship because such an omission may lead to biased statistical estimates (i.e. average results that cannot be trusted) or result in statistically nonsignificant findings (Guenther et al., ). Stakeholder theory also implies that, as already suggested, different stakeholder groups may cause the CEP–CFP relationship to vary (Orlitzky, ). For example, Iwata and Okada () investigate whether different stakeholder groups focus on different environmental issues, which in turn affect a firm’s CFP differently. Their analysis within the Japanese manufacturing sector shows that, although the reduction of waste emissions has no significant impact on CFP, greenhouse gas (GHG) reductions tend to lead to an increase in CFP. Moreover, their results suggest that “investors, stockholders, and financial agencies take the long-run firm performance into account, but [other] stakeholders such as consumers and trading partners who are closely related to the goods market do not care about corporate environmental management in the short-run” (Iwata and Okada, , ). Similarly, Van der Laan et al. () conclude that the relationship between corporate responsibility (broader than CEP) and CFP “depends on the nature of the relationship between the stakeholder and the firm, distinguishing primary (or private) from secondary (or public) stakeholder groups” (p. ). In sum, organizational and institutional contexts play an important role in the assessment of the empirical evidence regarding the CEP–CFP links (Guenther et al., ). The average association, unless it is generalizable, may be highly deceiving (Orlitzky, , ; Orlitzky and Shen, ). Undoubtedly, differences in the operationalization of CEP, discussed next, also have a major impact.

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   



D M  C E P

.................................................................................................................................. As already suggested in Table . and the review above, CEP is a multidimensional construct (Guenther and Hoppe, ). Not only the aforementioned theoretical diversity, but also this measurement heterogeneity may explain the variability in findings because utilizing a certain measure may determine, or predetermine, the outcome of the CEP–CFP relationship (Guenther and Hoppe ; Horváthová, ). CEP measures may be categorized as follows: () outcome vs. process measures; () absolute vs. relative measures; () gate-to-gate vs. lifecycle measures; and () other measures.

Outcome vs. Process Measures An important distinction is between outcome-based and process-based measures of CEP (e.g. Busch and Hoffmann, ; Delmas et al., ; Xie and Hayase, ). While the former focus on the quantification of ecological impacts, such as the total amount of resources used or emissions generated, the latter consider the firm’s internal efforts by management to address environmental issues (Busch and Hoffmann, ). Thus, outcome-based measures do not take into account why and how a certain level of outcome is achieved. Rather, they assess the firm’s ecological footprint for a given point in time. Process-based measures, on the other hand, reflect managerial efforts, processes, and structures. They do not indicate to what extent managerial efforts affect the actual environmental outcomes. For outcome-based CEP measures, a large variety of possible indicators exists. Emissions of carbon dioxide (CO) are one example (e.g. Alvarez, ; Fujii et al., ), where high CO emissions are usually interpreted as poor environmental performance (Misani and Pogutz, ). Iwata and Okada () take waste and GHG emissions divided by sales and operating revenue as CEP outcome measures. Clarkson et al. () use the inverse of pollution propensity, calculated as toxics release inventory in pounds per $, cost of goods sold, in their measures of CEP. Horváthová () uses different types of emissions, normalized according to their impact on human health and the natural environment. Misani and Pogutz () point out that, in the study of outcome-based measures, it is important to consider that each type of indicator (e.g. emissions, resource consumption, effects on ecosystems) has its own unique characteristics. Therefore, each type is also expected to influence CFP differently. Darnall et al. () propose a process-based indicator, measuring CEP based on a firm’s adoption of an EMS, as discussed before in the section on the RBV. The study relied on survey data from the Organization for Economic Cooperation and Development (OECD), which asked managers whether they implemented nine different proactive environmental practices: written environmental policy, environmental

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

    

criteria used in the evaluation and/or compensation of employees, environmental training programs for employees, external environmental audits, internal environmental audits, benchmarking of environmental performance, environmental accounting, public environmental report, and environmental performance indicators/goals. The more of these environmental practices are implemented, the more comprehensive the organization’s EMS (Darnall et al., ). Other studies use EMS certification or reported organizational activities as processbased proxies. Whaba (), for example, examines whether firms with an ISO  certification—the most widely recognized international standard for EMS released by the International Organization for Standardization (Nishitani et al., )—exhibit a significantly higher market value than firms without. Zeng et al. () based their conclusions on two types of cleaner production activities as proxies of CEP: low-cost and high-cost activities. Low-cost activities aim to achieve “soft” goals like the improvement of employee environmental consciousness through training and evaluation or the increase of the product recyclability, whereas high-cost activities require considerable financial input and involve fundamental management changes. Based on eleven observable variables, Zeng et al. () test how the two different activities affect the firm’s financial and nonfinancial performance. Their results show that lowcost activities influence the firm’s financial performance more than nonfinancial performance, whereas high-cost activities contribute more to improving nonfinancial performance, such as corporate reputation. Some research has already investigated how the use of either outcome-based or process-based measures affects empirical conclusions. In the context of GHG emissions, Busch and Hoffmann () show a positive link between outcome-based measures of CEP (GHG emissions) and CFP; at the same time, their findings point to a negative relationship between process-based measures (carbon management) and CFP. Delmas et al. () examine this question more broadly and use the results of three different measures tapping different aspects of CEP. Based on a principal component analysis, they find (contradictory) evidence that CFP is positively correlated with process-based measures. For outcome-based measures, they also find a positive, but statistically nonsignificant effect.

Absolute vs. Relative Measures CEP measures can be subdivided into absolute and relative measures. Emissions, waste, or resource consumption can be measured in absolute weight—without comparative reference points (Tyteca, ). For example, Alvarez () analyzed how variations in CO emissions, measured in metric tons, affect firm performance. However, relative CEP measures, typically calculated as ratios and expressed as a percentage, are more commonly used in empirical studies. For example, Ragothaman and Carr () find waste intensity, measured as waste (toxic air release) per revenue dollar, to be negatively related to firm value. Furthermore, carbon intensity, measured

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

as the ratio between the total GHG emissions (in tons) and a firm’s sales, is an example for a relative CEP variable (Busch and Hoffmann, ). Sueyoshi and Goto () examine if environmental investment and expenditure enhance CFP within the US electric utility industry. As explanatory variables, the authors use two relational variables: environmental protection facilities (the total amount of investment for environmental protection facilities divided by the total amount of investment for electric utility plants) and environmental protection costs (the annual expenditure for environmental protection divided by total operating revenue).

Gate-to-Gate vs. Lifecycle Measures With regard to the scope of CEP, a useful distinction can be made between gate-togate measures and a more comprehensive lifecycle analysis (LCA). Sharfman and Fernando’s () study is a good example of a gate-to-gate perspective because their CEP measure is based on Toxic Release Inventory (TRI) data, which assess waste management activities within the firm and the amount of toxic chemical substances that the company releases directly. Advocating a lifecycle perspective, Delmas and Nairn-Birch () argue that research so far has not transcended firm boundaries, although the emissions of a firm’s supply chain typically far exceed its direct emissions. Thus, in their study of CEP, they use both direct GHG emissions as well as supply chain-related GHG emissions. Studies can also draw on a combinatorial approach. For example, Misani and Pogutz () use CEP measures that are in between a gate-to-gate perspective and a LCA. They measure CEP based on Scope  and Scope  GHG emissions, disclosed through the Carbon Disclosure Project (CDP). Scope  covers a firm’s direct GHG emissions from sources that the firm owns and controls (e.g. electricity generation, physical or chemical processing, and fuel combustion). In contrast, Scope  includes indirect GHG emissions stemming from purchased electricity. Although this Scope  consideration transcends the company’s boundaries, the study does not follow a full LCA approach, which would require also covering Scope  emissions—that is, all other indirect GHG emissions that occur upstream and downstream in the value chain.

Other Measures and Study Designs Accounting disclosures CEP measures can also be derived from companies’ own environmental disclosures (Guenther et al., ). Here, the amount and type of environmental disclosure serves as a proxy for the firm’s actual CEP (Guenther and Hoppe, ). For instance, Sinkin et al. () examine the impact of eco-efficiency on market value. They argue that the external communication about the adoption of an eco-efficiency strategy is central.

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

    

Their classification of firms as eco-efficient is based on their issuance of a corporate environmental report (in combination with ISO  certification).

Perceptions CEP measures may also be based on perceptions. To describe environmental strategies and management practices, perceptual measures of CEP are typically used. AragónCorrea et al. (), for example, rely on self-ratings of managers to measure the proactiveness of a firm’s environmental strategy. Furthermore, outcome-based CEP can be based on perceptual measures. For instance, Lopéz-Gamero et al. () asked managers “to position [their] firm on a scale of – depending on the position of the firm in relation to competitors in environmental performance issues such as efficient use resources, reduction of emissions, residues and acoustic pollution, and so on” (p. ).

Third-party ratings Other studies assess CEP based on third-party (“expert”) ratings. Here, one widely applied data source is the social performance dataset (which includes environmental variables) compiled by Kinder, Lydenberg, Domini & Co., Inc. (KLD) (e.g. Delmas and Nairn-Birch, ; Kim and Statman, ; Sharfman and Fernando, ). KLD studies typically rely on data about a company’s strengths and weaknesses in a specific area of CEP. No further information beyond these strengths and weaknesses is provided. There are several other data providers, such as Sustainable Asset Management in Zurich or EOKOM in Munich, which rely on different rating procedures. Because of the proprietary nature of these rating systems, studies often cannot provide the statistical details necessary for an in-depth assessment of the reliability and validity of such an assessment method. Thus, the convenience of data availability rather than the verified validity of such data seems to be the primary driver of the conclusions derived from these studies (Chatterji and Levine, ; Chatterji et al., ). Apart from these measurement issues, there is another problem with third-party ratings: social investment ratings not only legitimize a field or industry (Déjean, et al., ), but in general also do not run counter to the investment objectives of their (socially and environmentally conscious) clients. Despite the lack of transparency by these funds, it is plausible to assume that the algorithms are set up in such a way that the CEP ratings would never be inversely correlated with CFP (see also Waddock and Graves, b). So, to some extent, we can presume a positive bias in CEP–CFP research that relies on social investment ratings of CEP.

Event studies Another way to assess the financial impact of CEP is through environment-related events. Event studies examine how the stock market reacts to CEP-related events (Endrikat, ). Flammer () analyzes stock market reactions to the announcement of eco-friendly corporate initiatives (e.g. the introduction of a recycling program) and eco-harmful corporate actions (e.g. hazardous waste). The author finds evidence that “companies reported to behave responsibly toward the environment experience a

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

significant stock price increase, whereas firms that behave irresponsibly face a significant decrease” (Flammer, , ). The meta-analysis of Endrikat () indicates that, overall, event studies show positive events to be related to positive market reactions, whereas negative events provoke negative market reactions (see also Guenther et al., ). In addition, market reactions seem to be stronger for negative events than for positive events. No doubt, this diversity in CEP measures and study designs has also contributed to the wide variability of empirical findings. Apart from theory fragmentation (see also Orlitzky et al., ) and measurement diversity, however, there is yet a third factor that confounds the conclusions in this field of inquiry.

R I L  M C

.................................................................................................................................. Theorizing does not occur in an ideological or political vacuum. Every theory choice, especially in the social sciences, is informed by researcher inclinations and preferences and, thus, infused with researcher values and norms (e.g. Burrell and Morgan, ; MacKenzie, ; Orlitzky, a, ). What has already been shown is that researchers’ values and norms affect not only the substance of social theory, but even methodological choices (MacKenzie, , ; Orlitzky, b, ). Also, there is evidence that social scientists, embedded in particular social ideologies and reinforced by peer pressure, exhibit considerable hypothesis confirmation bias (Orlitzky, a). Therefore, scientific inquiry may sometimes not be self-correcting because, once a certain view takes hold broadly and/or becomes paradigmatic, studies with opposite findings tend to be suppressed (Kuhn, ). Researchers whose values and theories are not welcomed—for example, many management researchers are explicitly or implicitly hostile to neoclassical economics—tend to self-select out (Duarte et al., ). So, the emergent consensus view may not reflect any true underlying relationship, but instead stem from the predominance of a particular institutional logic in a given field of inquiry (Orlitzky, a). Many academics who investigate social/environmental issues regard themselves as social/environmental activists. The majority, with a clear preference for collectivism over individualism, is aiming to change shareholder capitalism, either explicitly or implicitly (Hayek, ; Nozick, ; Schumpeter, ). One of the core values that is prized in this research community (studying organizations and the natural environment, or ONE) is that, in general, organizations and all other actors in society ought to become more “sustainable.” Thus, the finding that CEP instrumentally creates greater economic value can usefully be deployed as argumentative support for researchers’ advocacy of more ecologically sustainable management. When assessing a field of inquiry such as this one, one should note that researchers’ political-ideological leanings may, over time, become the predominant force in explaining the conclusions of their studies. Studies themselves may become academic

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

    

elites’ virtue signals that the actions preferred by those elites are, in fact, better for organizations and society (see Orlitzky, , for a more detailed discussion of the currently widespread phenomenon of virtue signaling). When, as in the case of CEP– CFP studies, the relevant variables are multidimensional, the increasing homogenization of knowledge can be explained easily. Let’s assume that CFP has four dimensions (Hamann et al., ), while CEP consists of twenty-five different aspects (for illustrative purposes). This assumption—illustrative only—would imply that  (*) different combinations (links) are possible. Even if there is no real relationship between CEP and CFP, sampling error will cause chance variation around the null in these  different combinations. (The choice of α controls the extent to which researchers allow themselves to be fooled by this chance variation.) Researchers’ own selectiveness in the reporting of results (also known as data snooping), combined with journal editors’ preference for statistically significant findings, may explain considerable publication bias in a field rife with scholars’ ideological biases (Ioannidis, ). From studies of business executives, we already know what these biases might mean: those that embrace leftwing political ideology generally tend to be more committed to corporate environmental responsibility and green initiatives (Chin et al., ; Di Giuli and Kostovetsky, ; Orlitzky, ). Moreover, Green parties are usually more radically leftwing in their political orientation than the Social Democrats (Neumayer, ). Hence, there is good reason to believe that when a field of inquiry evolves into a community of scholars who are committed to leftwing, collectivist ideology by a ratio greater than :, the findings in this field may come to resemble more and more the predominant, politically correct view (Duarte et al., ). Of course, this institutional logic of the instrumental-strategic benefits of CEP is, as already mentioned, constrained insofar as the empirical findings are not always consistent with this logic. This may explain why some researchers working in ONE oppose the instrumental stakeholder argument. To those opposing instrumental questions about the CEP–CFP link, normative arguments for the goodness of CEP, regardless of its economic consequences, take priority over other research questions because norms and values are, for all intents and purposes, unconstrained by external reality. Nevertheless, it is remarkable that over  percent of the findings presented in Table . are in line with the embraced theories and, thus, in the (positive) direction proposed by the researchers. Scientific “consensus” may mirror the values and norms (of ideological conformity) in the research community to a larger extent than it accurately depicts the underlying empirical generalities.

C R

.................................................................................................................................. This literature review summarized important aspects of the CEP–CFP performance debate. In line with the theoretical arguments, which support both positive and negative links between CEP and CFP, recent studies (published between  and

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

) produced empirical evidence for both. When looking at the recent academic literature on this topic as a whole, the majority of studies arrives at the conclusion that environmental efforts pay off. As such, the CEP–CFP research community seems to move away from the general question, Does it pay to be green? Rather, a more important practical and theoretical question to ask is: “When does it pay to be green?” (Dixon-Fowler et al., ; Guenther et al., ; King and Lenox, ). In a world of changing ecological conditions, aligning corporate strategies with these conditions and related stakeholder expectations is crucial for business success. In the ecological context, this alignment, or fit, requires asking questions about projectspecific payoffs (Berchicci and King, ). There are always going to be more and less advisable expenditures to improve CEP—and managers ought to make decisions about these expenditures based on reliable, economic metrics (Siegel, ). Nonetheless, effective strategic management often requires cognitive reliance on more long-term guesses, which are inherently difficult to quantify (Marcus and Fremeth, ). The assumption that every expenditure to enhance CEP is a wise organizational investment with clear strategic payoffs is an overgeneralization (even though it is currently rewarded by institutional logics prescribing corporate greening as a politically correct norm). Scholars, who invoke a virtuous cycle in this area (see e.g. Orlitzky, ), argue that stakeholders would reward firms with good reputations for strong commitments to CEP. Therefore, firms with high levels of CEP are generally assumed to be more successful financially. In turn, better financial performance provides the resources to do even more good in future CEP (McGuire et al., ; Waddock and Graves, a). If this virtuous cycle exists, then a well-managed firm would have high CEP and high CFP—a big if. As we argued in the final section, the findings in this area may be more a mirror of a research community’s institutional logics than a camera depicting organizational reality (Orlitzky, a).

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   



Dixon-Fowler, H. R., Slater, D. J., Johnson, J. L., Ellstrand, A. E., and Romi, A. M. . Beyond “does it pay to be green?”: A meta-analysis of moderators of the CEP-CFP relationship. Journal of Business Ethics, , –. Donaldson, T., and Preston, L. . The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, (), –. Duarte, J. L., Crawford, J. T., Stern, C., Haidt, J., Jussim, L., and Tetlock, P. E. . Political diversity will improve social psychological science. Behavioral and Brain Sciences, , –. Eiadat, Y., Kelly, A., Roche, F., and Eyadat, H. . Green and competitive? An empirical test of the mediating role of environmental innovation strategy. Journal of World Business, , –. Eisenhardt, K. M., and Graebner, M. E. . Theory building from cases: Opportunities and challenges. Academy of Management Journal, , –. Endrikat, J. . Market reactions to corporate environmental performance-related events: A meta-analytic consolidation of the empirical evidence. Journal of Business Ethics, (): –. Flammer, C. . Corporate social responsibility and shareholder reaction: The environmental awareness of investors. Academy of Management Journal, (), –. Freeman, R. E. . Strategic Management: A Stakeholder Approach. Boston: Pitman. Friedman, M. . The social responsibility of business is to increase its profits. New York Times Magazine,  (Sept. ), . Fujii, H., Iwata, K., Kaneko, S., and Managi, S. . Corporate environmental and economic performance of Japanese manufacturing firms: Empirical study for sustainable development. Business Strategy and the Environment, , –. Guenther, E., and Hoppe, H. . Merging limited perspectives: A synopsis of measurement approaches and theories of the relationship between corporate environmental and financial performance. Journal of Industrial Ecology, , –. Guenther, E., Hoppe, H., and Endrikat, J. . Corporate financial performance and corporate environmental performance: A perfect match? Zeitschrift für Umweltpolitik und Umweltrecht, (), –. Guenther, E., Busch, T., Endrikat, J., Guenther, T. W., and Orlitzky, M. . What we know about the economic payoffs of corporate ecological sustainability. In J. Weber and D. Wasieleski (eds), Business and Society : Corporate Social Responsibility, –. Bingley, Yorks: Emerald. Hamann, M., Schiemann, F., Bellora, L., and Guenther, T. W. . Exploring the dimensions of organizational performance: A construct validity study. Organizational Research Methods, (), –. Hart, S. L. . A natural-resource-based view of the firm. Academy of Management Review, (), –. Hart, S. L., and Ahuja, G. . Does it pay to be green? An empirical examination of the relationship between emission reduction and firm performance. Business Strategy and the Environment, , –. Hart, S. L., and Milstein, M. B. . Creating sustainable value. Academy of Management Executive, (), –. Hayek, F. A. . The intellectuals and socialism. University of Chicago Law Review, , –. Hedges, L. V., and Olkin, I. . Vote-counting methods in research synthesis. Psychological Bulletin, , –.

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  ........................................................................................................................

ENTREPRENEURSHIP/ SOCIAL ENTREPRENEURSHIP ........................................................................................................................

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  ......................................................................................................................

    Responsible Innovators for a Sustainable Future ......................................................................................................................

     

T field of corporate social responsibility (CSR) has evolved from early forms of philanthropy (Carroll, , ) and an understanding that CSR means doing more than what is required by the law (McWilliams and Siegel, ) to conceptualizing CSR as stakeholder engagement and contributing to a triple bottom line of economic, social, and environmental performance (see e.g. the definition of international organizations, EU, ; UN Industrial Development Organization, ). This evolution has been driven to a great extent by social transformation processes and corresponding changes in societal expectations about the roles and responsibilities of business (Doh and Guay, ; Matten and Moon, ; Scherer and Palazzo, ; Scherer et al., ). More recently, scholars have argued that businesses should assume political responsibilities by providing global public goods and contributing to global governance (Mäkinen and Kourula, ; Matten and Crane, ; Scherer and Palazzo, , ; Scherer et al., ; Whelan, ). Here, we consider the emerging global agenda for sustainable development and its relevance to redefining the roles and responsibilities of businesses. The ratification of the Sustainable Development Goals (SDGs) by the United Nations (UN) member countries in  indicates that sustainable development for the planet is now widely recognized as a timely and relevant issue (UN, ). The SDGs raise awareness of the limitations of our planetary resources. Sustainable development has many layers that affect both people and planet. Planetary resources are becoming stretched, and certain planetary boundaries necessary for sustainable living have already been crossed (e.g. with regard to climate change or the rate of biodiversity loss) (Rockström et al., ). Moreover, humanitarian catastrophes such as starvation, epidemics, and mass flight are far from being resolved or prevented (George et al., ; Griggs et al., ; Whiteman et al., ). These challenges to sustainability also change the expectations of societal stakeholders about the role of businesses in society. Businesses are now

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

     

considered important actors in contributing to sustainable development. CSR has become a means not only for avoiding harm along the business supply chain but for actively doing good by contributing to sustainable development (Aguilera et al., ; Stahl and Sully de Luque, ). Aggravating these challenges are societal transformation processes that have recently been summarized under the term “post-national constellation .” (Scherer et al., ). This transition toward a post-national constellation . is characterized by the emergence of new forms of populism, nationalism, and even fundamentalism, while democratic institutions are weakened and civic liberties restricted, even in rule-of-law states (Scherer et al., ). Moreover, value chain activities are increasingly outsourced to fragile states, where legal and administrative systems are often insufficient for regulating the negative externalities that businesses create for society and the environment (Messner et al., ; Scherer et al., ). Whereas the global trend towards sustainable development suggests uniform business strategies, the increasing variety of social and political contexts in global business seem to require idiosyncratic strategies, the adaptation to local standards and conditions, and a response to contradictory requirements (Greenwood et al., ; Scherer et al., b). The situation is complicated further by the fact that different economic sectors reveal different sustainability challenges that require different strategies and contributions by business firms. Consequently, societal transformation processes and the global agenda for sustainable development create strong expectations for CSR and intensify the need to become more proactive and to respond to the various challenges (Scherer et al., ; Stahl and Sully de Luque, ). In particular, the new responsibility that we see for the business firm in this setting is to provide responsible innovation by developing products and processes that do no further harm to people or planet and at the same time contribute to sustainable development. This new role of businesses as responsible innovators includes finding solutions that support collective decision-making and global collaboration to help address governance deficits and produce global public goods (Kaul et al., ). In this chapter, we argue that responsible social and technological innovations are necessary to address the sustainability challenges facing people and planet. Businesses are crucial to developing and diffusing these innovations. As we highlight, current research investigates responsible innovation by firms without accounting sufficiently for differences in industry-specific challenges or firm-specific capabilities. However, from the primary sector of agriculture and extractive industries to knowledge-intensive industries such as information and communications technology (ICT), firms face various challenges in sustainable development and possess diverse capabilities that may contribute to resolving sustainability problems. We therefore discuss the challenges of and opportunities for responsible innovation across the spectrum of economic sectors. Based on this analysis, we suggest new modes of corporate governance and responsible leadership that can help to foster responsible innovation. We conclude by deriving future research directions from these insights.

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   



B  F  R I

.................................................................................................................................. Grand challenges are massive social and environmental challenges that transcend national borders and that either already have negative effects on a large number of people or will have negative effects in the future (Ferraro et al., ; George et al., ). Examples include poverty, inequality, hunger, access to water, violent conflict, climate change, deforestation, ocean acidification, and the loss of biodiversity. The SDGs outline the world’s sustainable development agenda for addressing these grand challenges (UN, ). Capitalist societies require economic growth and consumption to function, so it seems unlikely that consumption will decrease or be transformed so as to allow life on our planet to continue sustainably. Moreover, the challenges to sustainable development are further aggravated by worldwide population growth and growing purchasing power in developing economies. Reaching the SDGs and guaranteeing a sustainable future for people and planet therefore require innovation to improve the sustainability of products and processes (Owen et al., , ; Voegtlin and Scherer, ). Innovation is “the generation, acceptance and implementation of new ideas, processes, products or services” (Thompson, , ). Fostering innovation that addresses grand challenges requires that innovation is pursued reponsibly (Owen et al., , ). We argue that responsible innovation involves three essential elements: first, new products and processes should avoid further harm to people and planet; second, responsible innovation should actively do good by focusing on grand challenges and providing remedies for the negative effects of societal transformation processes; and third, responsible governance at various levels should steer innovation toward avoiding harm and doing good (Voegtlin and Scherer, ). While research on innovation process management focuses mainly on ensuring that new products or processes avoid harm (Lee and Petts, ; Stilgoe et al., ), social and technological innovation need also to focus explicitly on doing good. Research that focuses on the doing-good dimension of responsible innovation has proliferated in recent years, and an emerging plurality of voices now addresses various approaches to and aspects of responsible innovation. Scholars research such concepts as sustainabilityoriented innovation (Goodman et al., ; Klewitz and Hansen, ), social innovation and entrepreneurship (Dacin et al., ; Mulgan, ), eco or green innovation (Karakaya et al., ; Schiederig et al., ), and co-creation (Dahan et al., ). However, research around these concepts still seems to have some blind spots; it often either focuses on governmental regulation (e.g. Owen et al., ; Stilgoe et al., ) or treats the business firm as a uniform entity across institutional contexts (Dacin et al., ; Schiederig et al., ). Research on businesses particularly neglects differences across industries and does not fully consider the potential impact of structures, processes, or behavior within the firm. In this chapter, our main focus is therefore on

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

     

the business firm and on industry-specific challenges and opportunities for responsible innovation. Moreover, we examine corporate governance and leadership as facilitators of responsible innovation within the firm. Our aim is to highlight the implications of differences across economic sectors and firm-internal structures and behavior and to propose an agenda for future research on responsible innovation that addresses the gaps we have mentioned. Our discussion includes illustrative examples of responsible innovation in a variety of settings.

C  O F R I  D E S

.................................................................................................................................. Economic activities have traditionally been clustered into three major economic sectors (made prominent by the works of Clark, , Fischer, , and Fourastié, ): the first sector of agriculture and extractive industries, the second sector of manufacturing and construction, and the third sector of services and the banking industry. This classification has allowed scholars to study the varying importance of economic activities for the overall well-being of societies (Kenessey, ). The sectors represent industries that “differ significantly from each other—in the use of natural resources, in the scale of operation of the productive units common to each, in the production process in which they engage, in the final products that they contribute, and in the trends in their shares in total output and resources used” (Kenessey, , ). Recent technological innovation has led scholars to extend the series to a fourth sector, the ICT industries (Zuppo, ). These industries differ from industries in other sectors by focusing their activities on “the devices and infrastructures that facilitate the transfer of information through digital means” (Zuppo, , ). A consideration of responsible innovation also seems to require our taking into account a fifth sector: the emerging sharing economy (Cohen and Kietzmann, ; Hamari et al., ). The sharing economy differs from the other economic sectors in that the business model is based on collaborative consumption, that is, “the peer-topeer-based activity of obtaining, giving, or sharing the access to goods and services” (Hamari et al., , ). This is usually coordinated by a business venture and assisted by ICT, which allows the sharing experience to be scaled (Cohen and Kietzmann, ). What makes this sector unique and different from the others is that fixed costs only play a minor role in the calculations of businesses in this sector. The economic sectors provide a useful heuristic for analyzing the differential impact of grand challenges on business firms and their differing potential for responsible innovation (Scherer, ). Table . gives an overview of the economic sectors and their relation to sustainable development.

Table 14.1 New Role for Business: Business as Responsible Innovators According to Economic Sectors Manufacturing and construction

Service and banking industry

ICT industries

Sharing economy

Major CSR/ sustainability challenges

Social and environmental challenges related to limited natural resources

Social and environmental challenges along the global supply chain

Social challenges related to exploitation of human labor in the service sector; danger of unintended negative effects of financial innovations

Danger of unintended negative effects of ICT innovations, including issues of data privacy, information and human rights

Social challenges related to exploitation of human labor; unintended negative effects on other parts of the economy

Main SDGs that could be targeted

No poverty (SDG 1) Zero hunger (SDG 2) Clean water and sanitation (SDG 6) Decent work and economic growth (SDG 8) Reduced inequalities (SDG 10) Responsible consumption and production (SDG 12) Climate action (SDG 13) Life below water (SDG 14) Life on land (SDG 15)

No poverty (SDG 1) Clean water and sanitation (SDG 6) Affordable and clean energy (SDG 7) Decent work and economic growth (SDG 8) Industry, innovation, and infrastructure (SDG 9) Reduced inequalities (SDG 10) Sustainable cities and communities (SDG 11) Responsible consumption and production (SDG 12) Climate action (SDG 13)

No poverty (SDG 1) Good health and well-being (SDG 3) Quality education (SDG 4) Gender equality (SDG 5) Decent work and economic growth (SDG 8) Reduced inequalities (SDG 10) Supporting businesses in the other economic sectors to contribute to the SDGs

Quality education (SDG 4) Industry, innovation and infrastructure (SDG 9) Supporting businesses in the other economic sectors to contribute to the SDGs

Industry, innovation and infrastructure (SDG 9) Sustainable cities and communities (SDG 11) Responsible consumption and production (SDG 12) Climate action (SDG 13)

(continued )

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Agriculture and extracting industries

Potential for responsible innovation

Agriculture and extracting industries

Manufacturing and construction

Service and banking industry

ICT industries

Sharing economy

Innovate collective decision-making within cross-sector partnerships for sustainable development

Innovate collective decision-making within cross-sector partnerships for sustainable development

Transform investment to include social and environmental performance indicators; innovate finance to help the bottom of the pyramid; consult companies from other industries on SD

Infuse other economic sectors with ICT technologies for SD

Spread the business model of the sharing economy to other economic sectors

Process and product innovation for SD along the whole lifecycle of a product or commodity

Process and product innovation for SD along the whole value chain; MNCs supporting social entrepreneurship

Process and product innovation that help address issues of tax fraud, financing terrorism or unsustainable project financing

Process and product innovation that help address issues of data privacy, information and human rights

Strategic renewal to clearly address SD with the business model

Developing businesses that contribute to the sustainable use of natural resources and commodities

Developing businesses that contribute to sustainable production and consumption

Developing businesses for SD based on financial innovations (e.g. microinsurance, blockchain technology)

Developing businesses for SD based on ICT innovations (e.g. using ICT to help people in need, empower women, etc.)

Developing new business models for sustainable living in megacities and collaborative consumption

Note: SD stands for sustainable development

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Table 14.1 Continued

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   



First Sector: Agriculture and Extractive Industries Agriculture and extractive industries strongly contribute to and are affected by the challenges of sustainable development. The entire sector suffers from unsustainable practices while often being a pillar of the economy in developing states and states with fragile or despotic governments (Blowfield and Dolan, ; Hilson, ). The unsustainable practices relate to social and environmental issues and are closely connected to reliance on limited natural resources, be they mineral resources or the availability of land for farming. In addition, these industries require extensive manual and largely unskilled labor at the very beginning of the value chain (Blowfield and Dolan, ; Hilson, ). The sector often generates negative externalities for the environment, such as the pollution of groundwater through pesticides or chemical waste, deforestation to clear land for farming, and the destruction of natural habitats through mountain top removal mining. Firms in this sector often face the challenge of balancing exploitation of agricultural or mining areas against preservation of natural flora and fauna (see e.g. the discussion around sustainable palm oil; RSPO, ). The activities of companies in these industries also affect wildlife, for example when palm oil production endangers orangutans’ habitats (Greenpeace, ) or the use of pesticides endangers bees (Guardian, a). The reliance of these industries on unskilled workers often leads to the exploitation of a workforce whose lack of education and skills means it rarely has an alternative to working in an agricultural or extractive business. This exploitation might involve severe forms, including modern forms of slavery (Crane, ). These unsustainable practices are often supported or even encouraged by states that rely heavily on the income from these industries and in which corruption is prevalent among government officials. As a consequence, countries with rich natural resources often suffer from the resource curse: the economic benefits of exploiting the resources only enrich corrupt elites, while the people in these countries are even worse off than in countries without many natural resources (Sachs and Warner, ). Overall, the social and environmental challenges that the primary sector faces touch upon almost all of the SDGs (e.g. no poverty, zero hunger, clean water, decent work, responsible consumption, climate action, life below water, and life on land). The need for responsible innovation is clear, and its possibilities are abundant. Responsible innovation requires innovative solutions at various levels, including the creation of new businesses, corporate entrepreneurship, and innovation in developing collective global solutions. Innovations may be technological ones that help to prevent negative environmental impacts or collaborative solutions that include the political engagement of firms in improving conditions in fragile states. Existing collaborative solutions on the global level include cross-sector partnerships such as the roundtable on sustainable palm oil (RSPO, ) or the Kimberley Process, which seeks to reduce the flow of conflict diamonds around the world. Conflict diamonds are “rough diamonds used to finance wars against governments” (Kimberley

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

     

Process, ). These initiatives are the first steps toward sustainable agriculture and mining, but are still not enough to reach the SDGs. Innovative firms might help to push global self-regulation further in that direction. Moreover, corporations can develop innovative sustainable agricultural methods (including organic farming) or introduce solutions to counter the negative social and environmental impacts of mining. Sustainability challenges also offer various opportunities for new business ventures. One example of an innovative business idea for doing good in this sector is a startup in Zurich, Switzerland. The company, Wildbiene + Partner, sells hives for raising bees to help counter the worldwide loss of bees (on honey bee colony losses, see Seitz et al., ). It mails the hives to customers via Swiss Post, along with fifteen non-stinging bees still in their cocoons (The Local.ch, ; Wildbiene + Partner, ). The entrepreneurs claim they have helped to propagate , bees and to pollinate  million blossoms (Wildbiene + Partner, ). Finally, innovation at the end of the lifecycle of products is also possible, for instance, with regard to reducing food waste (World Resources Institute, ) or recycling rare earth metals and precious metals (Binnemans et al., ).

Second Sector: Manufacturing and Construction The manufacturing and construction industries are those that have traditionally most often been associated with CSR and are among the main targets of NGO activism, especially if firms produce directly for consumers (Doh and Guay, ; Spar and La Mure, ). The sustainability challenges this sector faces involve increasing the sustainability of the supply chain and production process. This includes both improving working conditions along the supply chain and reducing the environmental impact of production (Brammer et al., ; Donaghey et al., ). Multinational companies (MNCs) in this sector have been particularly affected by the societal transformations mentioned. Often headquartered in developed countries, they outsource production to reduce working costs and so create a value chain that is distributed globally. Consequently, their suppliers and their production facilities are often located in fragile states, and the MNCs must therefore deal with heterogeneous legal regulations and societal norms across the different countries they do business in or source from (Scherer and Palazzo, ). Nationalism and fundamentalism, emerging in both developed and developing countries, is now making the integration of a diverse workforce even more difficult (Patzer et al., ). Innovation in this sector can be directed at improving positive impact along the supply chain and includes contributions to global regulation. In this regard, the second sector contains companies that are at the forefront of CSR and are deeply engaged in sustainable development. The example of Unilever shows how a company can integrate sustainability along its whole value chain (Unilever, ; The Economist, ). The company’s sustainable living plan is intended to create long-term value for its stakeholders and operates under the premise that “business growth should not be at

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

the expense of people and the planet” (Unilever, ). The clothing company Patagonia even shows its commitment to sustainability by actively demanding that customers should not buy one of its jackets if they do not really need it, by running the campaign “Don’t buy this jacket” on Black Friday, the most important sales day in the US (Patagonia, ). In another part of the sector, innovation in the construction industry can focus on building sustainable cities and communities (SDG No. ). The challenges posed by heterogeneous norms and regulations have also been faced positively by MNCs; examples include companies that assume political responsibility when they engage in global self-regulation and voluntarily submit to soft law or contribute to the provision of global public goods, such as education, public health, and clean drinking water (Kaul et al., ; Scherer and Palazzo, ). In the UN Global Compact, which is still the largest global governance initiative dedicated to CSR, companies in the second sector make up more than half of the , signatory companies (UN Global Compact, ). In recent years, many MNCs from developing countries have become strong international players in the manufacturing and construction industries. While MNCs in developed countries are usually subject to stricter regulation in their home country and produce or source from countries with less strict environmental or social requirements, the opposite is typically true for MNCs from developing countries. Moreover, many of the largest MNCs from these countries are state owned. These specificities and their impact on sustainability warrant further research.

Third Sector: Service and Banking Industry The service and banking industry is gaining increasing importance in today’s global economy and has become one of the main pillars of economic growth in developed countries (Greenwood and Scharfstein, ). Moreover, as part of the growing service infrastructure around CSR (Waddock, ), consulting becomes a key sector for supporting and facilitating responsible innovation. CSR consulting comprises technical consulting about how to reduce environmental footprints, consulting on effective CSR implementation, and more general consulting on CSR reporting and communication. The specific expertise and knowledge accumulated by consulting companies can help to develop and implement new ideas for addressing sustainable development challenges. However, while CSR consulting can help drive sustainable development, it bears the danger of becoming a means of establishing CSR as a “box-ticking” exercise or a marketing tool (Fleming and Jones, ). In this regard, it would be important to investigate the extent to which the consulting industry can help firms develop truly responsible innovation. Companies in the service industry are especially prone to unsustainable working conditions, as they rely heavily on human resources. Sustainable development here relates to issues such as gender equality (SDG No. ) and issues of decent work (SDG No. ). And while the banking and financial industry has been very innovative in recent

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

     

years in developing new financial products, the potential of these innovations to create negative externalities has been underestimated (Marti and Scherer, ). One of the unintended consequences of these innovations was the financial crisis in , but the financial industry has been found to be complicit also in tax fraud, financing terrorism, and financing projects that damage the environment, such as building large dams. However, this capacity for innovation can also contribute significantly to doing good. With regard to solutions for global regulation, financial institutions are for instance cooperating within the framework of the Equator Principles to avoid the financing of unsustainable projects (Equator Principles, ). Responsible finance and investing have gained prominence and can provide an effective lever for responsible innovation. Responsible investment in such cases means the integration of social, environmental, and governance issues into finance decisions (Dumas and Louche, ). The consulting industry can help firms to develop truly responsible innovation, especially by examining industry-specific issues. On the corporate level, banks establish responsible risk management procedures to avoid investing in unsustainable businesses. They also try to minimize their environmental impact; for instance Credit Suisse, a Swiss bank, has operated greenhouse-gas neutral globally since  (Credit Suisse, ). Other service industries have room for responsible innovation in working conditions; examples include the facilities service, health care, and call centers (Krenn, ; Rose and Wright, ). There is also great potential for individual entrepreneurship, as the Nobel Peace Prize winner Muhammand Yunus showed when he founded the Grameen Bank and thus pioneered the widespread establishment of microfinance (Grameen Bank, ). Microfinance is based on small loans offered to entrepreneurs and small businesses that lack access to conventional banking services. It targets people underserved by financial institutions, including women, the poor, and the illiterate (Grameen Bank, ; Monne et al., ). However, microfinance still faces challenges in reaching its original goal of helping to alleviate poverty. For instance, microfinance activities often do not reach the poorest rural areas (Monne et al., ). Further research and innovation is required to address these challenges. Finally, technological innovation in the financial industry, such as the blockchain technology used in Bitcoin and other digital currencies (New York Times, a), can offer opportunities for firms that want to do good, for instance by making the transfer of money less prone to manipulation and thus helping to fight corruption.

Fourth Sector: ICT Industry ICT companies can help to foster responsible innovation. The internet has changed both the way businesses produce goods and services and how customers buy and order them. ICTs can both help established firms seize entrepreneurial opportunities and be the starting point for new business ventures. One example of an entrepreneurial idea in this sector is Soliguide (), a platform that provides information for those in need.

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   



It uses ICT to centralize information for people in precarious situations, such as homeless people and refugees about where they can find help (places to sleep, food, medical help, etc.). The goal is to support the (re)integration of people in need into society and so help communities alleviate poverty. However, ICT innovations can also have unintended consequences and negative effects on sustainable development. New ICT, as all innovation, is subject to the danger of the “dual use” of innovation: it is difficult to anticipate to which ends the new technology will be used, and it can turn out to be both beneficial and harmful to people and the planet (Stilgoe et al., ; Voegtlin and Scherer, ). For instance, Brusoni and Vaccaro observe that There are organizations that currently exploit internet-based technologies to manage “digital sweatshops”, i.e. overcrowded rooms where workers play online games for up to twelve hours a day in order to create virtual goods . . . which can then be sold to other, obviously richer, players . . . But, there are other kinds of organizations, such as Samasource, that use the very same technology to empower women, increase the freedom of disadvantaged people in very poor and underdeveloped areas of the world supporting human integral development. (Brusoni and Vaccaro, , –)

ICT companies also face challenges in the areas of privacy, information rights, and human rights (Brusoni and Vaccaro, ; Pollach, ; Scherer et al., ). The digitalization of the economy and big data can be used to restrict civic liberties and undermine the fundamental constitutional rights of democratic societies (Rifkin, ; Varian, ; Zuboff, ). Zuboff has used the term “surveillance capitalism” to describe the negative consequences of an information economy that tries “to predict and modify human behavior as a means to produce revenue and market control” (Zuboff, , ). One example of this is Google’s provision of the private data of individuals’ search histories to US state agencies (Zuboff, ). Another negative example of ICT use is the rise of socalled “click-farms,” where workers, often under inhumane working conditions, try to boost the popularity of their customers’ products by clicking the “like” button on Facebook pages or increasing the views of YouTube videos (Guardian, ). To conclude, ICT businesses have great potential to drive sustainable development, as long as the innovations developed in this sector are deployed responsibly. Future research might investigate the conditions under which such businesses can foster responsible innovation.

Fifth Sector: Sharing Economy The sharing economy, which is based on collaborative consumption, is considered by some scholars and practitioners to be a new way of doing business that offers solutions that directly address the challenges of sustainable development. Scholars argue that it “has been expected to alleviate societal problems such as hyper-consumption, pollution,

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

     

and poverty by lowering the cost of economic coordination within communities” (Hamari et al., , ) and that the success of business models based on collaborative consumption was “driven by a growing environmental consciousness combined with the ubiquity of Internet and associated information and communication technologies which make sharing possible at scale” (Cohen and Kietzmann, , ). Companies that base their business model on collaborative consumption, such as AirB&B and Uber, offer services through which suppliers do not have to include fixed costs in their calculations. Rather, they bring the supply side, which possesses underutilized resources such as spare rooms in an apartment or home or a car and time to drive around, together with the demand side. Consumers benefit from the sharing economy by renting goods at lower cost than from established hotel and taxi businesses (Cohen and Kietzmann, ; Zervas et al., ). Collaborative consumption has the potential to aid sustainable development in megacities (SDG No. ) and help responsible consumption (SDG No. ) and climate action (SDG No. ). However, the leading companies in this sector have also faced criticism. Travis Kalanick recently resigned as CEO of Uber after the company was exposed as having a workplace culture that included sexual harassment and discrimination (New York Times, b). In addition, business models like Uber’s are prone to (self-)exploitation (e.g. due to low payments and overlong working hours) of those who offer the services (Guardian, b). Nonetheless, there are many opportunities to adopt such a business model and help contribute to sustainable development, especially for individual entrepreneurs. A recent example is a startup called doordoor. This company offers on-demand public transportation that is app-based and relies on algorithms to calculate the most efficient routes. It is thus more flexible than the static routes and fixed schedules of regular public transportation (doordoor, ). We therefore consider the sharing economy and its principle of collective consumption as promising for developing innovative businesses that do good by creating solutions to the sustainable development challenges that people and planet are facing.

R G  L  C F S I

.................................................................................................................................. The new role of the business firm as responsible innovator can create tensions; limited resources must be deployed in pursuit of multiple objectives and bottom lines, thus raising questions about the prioritization of stakeholder demands. Coping with these tensions and facilitating innovation for sustainable development require structural and personal support within the organization. We propose that governance structures and leadership that allow the firm to develop capabilities for deliberation and enable

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

reflexivity should be conducive to responsible innovation (Dryzek, ; Dryzek and Pickering, ). These organizational capabilities are the personal, structural, cultural, and technological preconditions that enable organizations to reflect on the status quo and to make use of deliberation as a problem-solving mechanism (see also Gold et al., ). Deliberation is at the core of theories of deliberative democracy and can be defined as “debate and discussion aimed at producing reasonable, well-informed opinions in which participants are willing to revise preferences in light of discussion, new information, and claims made by fellow participants” (Chambers, , ). Reflexivity is the possibility of a system to reconfigure itself when confronted with a changing environment (Dryzek and Pickering, ). Creating capabilities for reflexivity and deliberation within an organization can help firms to find a balance alongside the following three dimensions relevant for responsible innovation. First, it can help with the integration of the expert knowledge of specific stakeholders to generate ideas and the inclusion of a broad base of societal stakeholders to gain legitimacy for the implementation of those ideas. On the one hand complex problems such as the grand challenges require the knowledge and insights of experts to develop feasible solutions, on the other hand these problems are highly contested with conflicting values and interests of various stakeholders concerned. The inclusion of stakeholders helps firms to take into account these various interests and perspectives and to gain support and acceptance of different societal actors for the solutions of collective problems (Marti and Scherer, ). Second, it can allow for a balance between diversity and consensus, or between openness and closure. Firms who want to innovate responsibly must be open for changing societal trends and stakeholder expectations that help them define priorities regarding the goals of innovation. At the same time, pursuing innovation requires that decisions be made and that openness gives way to action. Third, reflexivity and deliberation can facilitate the decentralization of innovation management to allow the autonomous, bottom-up development of new ideas and centralization within the organizational hierarchy for efficient idea implementation and diffusion. Decentralization can empower employees and create sites for innovation and experimentation. Centralizing information flows and decisionmaking helps with spreading novel ideas throughout the organization and beyond (Dryzek and Pickering, ; Scherer and Voegtlin, ). Corporate governance and leadership can facilitate such deliberative capabilities. Building deliberative capabilities through corporate governance means deploying rights and responsibilities within the organization in a way that allows employees the discretion and autonomy to engage with stakeholders and provides resources for CSR; this can include stakeholder participation in the board, a long-term horizon for strategic goal setting, and rewarding executives for social and environmental performance (Filatotchev and Nakajima, ; Scherer et al., a). It also involves fostering an organizational culture that values openness and respect for others and encourages reflection (Scherer and Voegtlin, ). Research on responsible leadership is developing a growing consensus that views responsible leadership as leadership that engages with stakeholders and focuses on

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

     

delivering the bottom lines of economic, social, and environmental performance (Maak et al., ; Stahl and Sully de Luque, ; Waldman and Galvin, ). Responsible leaders consult with stakeholders, are open to considering and integrating stakeholders’ concerns into their decision-making, and try to balance the various interests. This can help firms to attract expert knowledge and secure the legitimacy needed for innovation. Such leaders are also more sensitive to societal expectations, which is helpful for defining the goals of innovation. Moreover, they can use the social capital established through their stakeholder relations to develop collaborative solutions to the social and environmental problems the firm may be facing (Doh and Quigley, ; Maak et al., ; Voegtlin et al., ). The diverse major challenges of the economic sectors might require adjustments to the emphases of corporate governance arrangements and responsible leadership. In the first and second economic sectors, the focus should be on facilitating social and ecological innovation along the supply chain. Moreover, engaging with heterogeneous expectations and norms along a global supply chain suggests a more self-conscious role for responsible leadership: in an era of hardening identities and emerging religious and political fundamentalism in particular, it requires discourses about values and norms to establish a common ground for doing business responsibly (Patzer et al., ). The responsibilities of management can also be extended to taking care of the company’s products at the end of their lifecycle (e.g. by reducing food waste and recycling rare earth metals), especially in the first and second economic sectors. Corporate governance can provide the means and incentives for corporate entrepreneurship to use innovations in the banking industry, in ICT, and the sharing economy to develop new products and processes that address the challenges of sustainable development. And while the dangers of the dual use of new ICT technologies require an emphasis on risk management, responsible leadership can also draw on ICT to better communicate with stakeholders. Overall, we propose that responsible leadership and governance can act as the “conscience” of the organization that steers innovation toward avoiding harm and doing good. Both responsible leadership and governance should consider the most pressing sustainability challenges of the economic sector the firm is in.

A A F F R

.................................................................................................................................. One well-received framework for guiding research and innovation is the Responsible Research and Innovation (RRI) framework (Dreyer et al., ; Owen et al., ). This framework is designed to produce strong policy implications, as EU Commissioner Maire Geoghegan-Quinn recognized when she emphasized that “our duty as policy makers (is) to shape a governance framework that encourages responsible research and innovation” (Geoghegan-Quinn , cited in Owen et al., , ). She proposed that the RRI framework be part of the European Commission’s Horizon  Strategy

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

(Owen et al., ). However, the RRI framework focuses mainly on governmental and policy implications and pays little attention to the business firm. Moreover, it does not clearly distinguish responsible research from responsible innovation, two areas with quite different consequences for the business firm (Dreyer et al., ). Our discussion has centered on the business firm, and we have argued that scholarly research needs to focus not only on how to encourage businesses to become responsible innovators but also on a more differentiated view of sector-specific challenges and opportunities and on firm-internal capabilities. In the following, we propose an agenda for future research in these directions. First, we suggest that future research should more broadly investigate the drivers of responsible innovation and what kind of incentives business firms need to engage in responsible innovation. This research could go beyond considering policy implications for the governments of developed states. For instance, it could try to characterize the role of the firm in promoting sustainability in failed states or identify how and by whom incentives for worldwide sustainable development can be provided, especially when nation states develop protectionist tendencies. It could also try to discern which conditions foster more incremental innovation and which are conducive to more radical change. This would also include reflecting on our theories of responsible innovation. Moreover, our discussion has indicated some of the differences among economic sectors. We suggest that accounting for these differences and searching for commonalities across sectors are both needed for research to identify the drivers of responsible innovation and develop impactful practical implications. For instance, empirical research could investigate which incentives that foster sustainable development work best for which economic sector. And while our discussion has shown that each sector faces industry-specific challenges and opportunities, there are also commonalities across economic sectors research could further investigate. For instance, as the framework of the SDGs is applied more widely, research could examine which SDGs can have the biggest impact across economic sectors. A starting point could be the SDGs that reappear across sectors in Table .. Another theme that emerges from our discussion is the possibility of cross-sector fertilization. Innovation in the banking industry, ICT industry, or the sharing economy can support sustainable development in businesses in other economic sectors. A further potentially interesting avenue to investigate would be how such cross-sector collaboration for sustainable development can be encouraged. In general, we would like to see empirical research on the boundary conditions of various institutional environments and their implications for responsible innovation. Apart from economic sectors, potentially fruitful lines of inquiry involve institutional differences across societies and the impact of cultural differences on responsible innovation. Moreover, what role do MNCs from emerging economies play in sustainable development? Some of these companies become strong international players. However, they often have different governance structures and goals from developedcountry MNCs, and these might affect their engagement in both the avoiding-harm and the doing-good dimensions of responsible innovation.

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

     

Most research on responsible innovation has neglected the relevance of firm-internal configurations and behavior. We have therefore suggested that innovation in processes and structures need to drive responsible product and service innovation and the responsible behavior of employees. We have discussed two important drivers of responsible innovation within business firms that are able to address both the commonalities and differences among economic sectors: responsible governance and leadership. Both present areas relevant for future research. While research on CSR is still predominantly focused on the firm level and the firm’s interaction with society, the proposed microfoundation can help to understand and enact the new role of the business firm as responsible innovator (Aguilera et al., ; Morgeson et al., ; Rupp et al., ). The future research directions are summarized in Table ..

Table 14.2 Future Research Directions on the Role of Business as Responsible Innovators Focus areas

Exemplary research questions

Generic questions

What are relevant drivers of responsible innovation and under what conditions will these drivers facilitate responsible innovation best? What are the conditions that contribute to incremental and to radical innovation for sustainable development? What theories can help us better understand and explain responsible innovation?

Global-level: Responsible innovation beyond governmental regulation

How and by whom can incentives for worldwide sustainable development be provided? What are the implications of the protectionist tendencies of nation states on innovation for sustainable development? What are boundary conditions of different institutional and cultural contexts with regard to responsible innovation? What is the role of the firm in promoting sustainability in failed states?

Industry-level: Implications of differences and similarities among economic sectors

What are industry specific boundary conditions for responsible innovation? How can firms leverage on the sustainability issues that are material for their economic sector? What are relevant sustainability challenges across economic sectors? How can innovation in one sector help with sustainable development in other sectors? Under what conditions can cross-sector solutions work?

Firm-level: Firm-internal structures, processes and behavior

How can the research and development process within firms be steered toward responsible innovation? What are relevant firm-specific capabilities necessary for responsible innovation? What impact do corporate governance and responsible leadership have on responsible innovation?

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C

.................................................................................................................................. In this chapter, we have advanced the argument that guaranteeing a sustainable future for people and planet requires responsible innovation. Business firms have the resources to contribute to sustainable development, and there is a changing expectation, both from scholars and practitioners, that CSR relates to a more proactive understanding of “doing good.” This has led us to propose a new role for the business firm as responsible innovator. In the course of the chapter, we have analyzed this new role and the responsibilities it implies for businesses within and across economic sectors. We thereby developed the following main arguments. First, to reach the goals of sustainable development, business firms should assume the role of responsible innovators and focus on developing solutions that do good for people and planet. Second, novel collaborative solutions between business and society are needed to address the challenges of current societal transformation processes. Third, firms in different economic sectors face different sustainability challenges and have different potentials to develop innovative solutions. Fourth, governance and leadership can help to facilitate responsible innovation. We have suggested several possibilities for future research. Overall, we hope that research takes up these important lines of inquiry and helps practitioners and policy-makers to understand what is needed to increase the impact of responsible innovation and so guarantee a sustainable future for our planet.

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     

Lee, R. G., and Petts, J. . Adaptive governance for responsible innovation. In R. Owen, J. Bessant, and M. Heintz (eds), Responsible Innovation: Managing the Responsible Emergence of Science and Innovation in Society, –. Lewes: Wiley. Maak, T., Pless, N. M., and Voegtlin, C. . Business statesman or shareholder advocate? CEO responsible leadership styles and the micro-foundations of political CSR. Journal of Management Studies, (), –. McWilliams, A., and Siegel, D. S. . Corporate social responsibility: A theory of the firm perspective. Academy of Management Review, (), –. Mäkinen, J., and Kourula, A. . Pluralism in political corporate social responsibility. Business Ethics Quarterly, (), –. Marti, E., and Scherer, A. G. . Financial regulation and social welfare: The critical contribution of management theory. Academy of Management Review, (), –. Matten, D., and Crane, A. . Corporate citizenship: Toward an extended theoretical conceptualization. Academy of Management Review, (), –. Matten, D., and Moon, J. . “Implicit” and “explicit” CSR: A conceptual framework for a comparative understanding of corporate social responsibility. Academy of Management Review, (), –. Messner, J. J., et al. . Fragile State Index . Washington, DC: The Fund for Peace. Monne, J., Louche, C., and Villa, C. . Rational herding toward the poor: Evidence from location decisions of microfinance institutions within Pakistan. World Development, , –. Morgeson, F. P., Aguinis, H., Waldman, D. A., and Siegel, D. S. . Extending corporate social responsibility research to the human resource management and organizational behavior domains: A look to the future. Personnel Psychology, (), –. Mulgan, G. . The process of social innovation. Innovations, (), –. New York Times. a. Blockchain: A better way to track pork chops, bonds, bad peanut butter? accessed July . New York Times. b. Uber founder Travis Kalanick resigns as C.E.O. accessed July . Owen, R., Macnaghten, P., and Stilgoe, J. . Responsible research and innovation: From science in society to science for society, with society. Science and Public Policy, (), –. Owen, R., Bessant, J., and Heintz, M. . Responsible Innovation: Managing the Responsible Emergence of Science and Innovation in Society. Lewes: Wiley. Patagonia. . Don’t buy this jacket. accessed Nov. . Patzer, M., Voegtlin, C., and Scherer, A. G. . The normative justification of integrative stakeholder behavior: A Habermasian view on responsible leadership. Business Ethics Quarterly, (), –. Pollach, I. . Online privacy as a corporate social responsibility: An empirical study. Business Ethics: A European Review, , –. Rifkin, J. . The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism. New York: Palgrave Macmillan. Rockström, J., Steffen, W., Noone, K., Persson, A., Chapin, F. S., Lambin, E. F., . . . Foley, J. A. . A safe operating space for humanity. Nature, (), –.

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Rose, E., and Wright, G. . Satisfaction and dimensions of control among call centre customer service representatives. International Journal of Human Resource Management, (), –. RSPO. . accessed Aug. . Rupp, D. E., Ganapathi, J., Aguilera, R. V., and Williams, C. A. . Employee reactions to corporate social responsibility: An organizational justice framework. Journal of Organizational Behavior, (), –. Sachs, J. D., and Warner, A. M. . The curse of natural resources. European Economic Review, (), –. Scherer, A. G. . Theory assessment and agenda setting in political CSR: A critical theory perspective. International Journal of Management Reviews, , –. Scherer, A. G., and Palazzo, G. . Toward a political conception of corporate social responsibility: Business and society seen from a Habermasian perspective. Academy of Management Review, (), –. Scherer, A. G., and Palazzo, G. . The new political role of business in a globalized world: A review of a new perspective on CSR and its implications for the firm, governance, and democracy. Journal of Management Studies, (), –. Scherer, A. G., and Voegtlin, C. . Corporate governance for responsible innovation: Approaches to corporate governance and their implications for sustainable development. Academy of Management Perspectives, online first, DOI: . Scherer, A. G., Palazzo, G., and Baumann, D. . Global rules and private actors: Toward a new role of the transnational corporation in global governance. Business Ethics Quarterly, (), –. Scherer, A. G., Baumann-Pauly, D., and Schneider, A. a. Democratizing corporate governance: Compensating for the democratic deficit of corporate political activity and corporate citizenship. Business and Society, (), –. Scherer, A. G., Palazzo, G., and Seidl, D. b. Managing legitimacy in complex and heterogeneous environments: Sustainable development in a globalized world. Journal of Management Studies, (), –. Scherer, A. G., Rasche, A., Palazzo, G., and Spicer, A. . Managing for political corporate social responsibility: New challenges and directions for PCSR .. Journal of Management Studies, (), –. Schiederig, T., Tietze, F., and Herstatt, C. . Green innovation in technology and innovation management: An exploratory literature review. R&D Management, (), –. Seitz, N., Traynor, K. S., Steinhauer, N., Rennich, K., Wilson, M. E., Ellis, J. D., . . . Caron, D. M. . A national survey of managed honey bee – annual colony losses in the USA. Journal of Apicultural Research, (), –. Soliguide. . accessed Apr. . Spar, D. L., and La Mure, L. T. . The power of activism: Assessing the impact of NGOs on global business. California Management Review, (), –. Stahl, G. K., and Sully de Luque, M. . Antecedents of responsible leader behavior: A research synthesis, conceptual framework, and agenda for future research. Academy of Management Perspectives, (), –. Stilgoe, J., Owen, R., and Macnaghten, P. . Developing a framework for responsible innovation. Research Policy, (), –.

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     

The Economist. . Unilever: In search of the good business. accessed Aug. . The Local.ch. . accessed July . Thompson, V. A. . Bureaucracy and innovation. Administrative Science Quarterly, (), –. UN. . accessed July . UN Global Compact. . accessed July . UN Industrial Development Organization. . accessed July . Unilever. . accessed July . Varian, H. R. . Beyond big data. Business Economics, (), –. Voegtlin, C., and Scherer, A. G. . Responsible innovation and the innovation of responsibility: Governing sustainable development in a globalized world. Journal of Business Ethics, (), –. Voegtlin, C., Patzer, M., and Scherer, A. G. . Responsible leadership in global business: A new approach to leadership and its multi-level outcomes. Journal of Business Ethics, (), –. Waddock, S. . Building a new institutional infrastructure for corporate responsibility. Academy of Management Perspectives, (), –. Waldman, D. A., and Galvin, B. M. . Alternative perspectives of responsible leadership. Organizational Dynamics, (), –. Whelan, G. . The political perspective of corporate social responsibility: A critical research agenda. Business Ethics Quarterly, (), –. Whiteman, G., Walker, B., and Perego, P. . Planetary boundaries: Ecological foundations for corporate sustainability. Journal of Management Studies, (), –. Wildbiene + Partner. . accessed July . World Resources Insititute. .  ways to cut global food loss and waste. accessed Aug. . Zervas, G., Proserpio, D., and Byers, J. W. . The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry. Journal of Marketing Research, (), –. Zuboff, S. . Big other: surveillance capitalism and the prospects of an information civilization. Journal of Information Technology, (), –. Zuppo, C. M. . Defining ICT in a boundaryless world: The development of a working hierarchy. International Journal of Managing Information Technology, (), –.

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  ......................................................................................................................

  Prospects for the Study of Market-Based Activity and Social Change ......................................................................................................................

    

I

.................................................................................................................................. W observe increasing skepticism among scholars but also the broader public about whether and how our economic system can provide sustainable and inclusive solutions for a host of newly arising or persistent social problems. In addition, organizational scholars have started to expose how economic and corporate activity often exacerbate social problems such as poverty and social exclusion and thereby contribute to turning such problems into “grand” challenges as both problem and solution spaces become illdefined, nested, and multifaceted (Amis et al., ; Ferraro et al., ). Over the last decades corporations—arguably the dominant form of economic organizing in capitalist societies—have invested considerable amounts of financial, human, and social capital in social initiatives addressing many of these social problems. A productive stream of management research has extensively theorized about the opportunities and challenges of such activities (for a review see McWilliams et al., ). This research also helps to unpack why—despite potentially good intentions—corporations often fail to create social impact and become social change agents. In this chapter, we view social impact as making progress on a social problem or societal challenge, and a social change agent as the respective actor who drives social impact. Studies have shown that corporations often fail to generate social impact as they lose sight of the tasks involved in addressing social problems, adopt largely ineffective initiatives, and revert back to “business as usual” when faced with tensions between social and economic goals (Wright and Nyberg, ; Wijen, ; Crane et al., ). Today, many call for radical

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

    

innovation and new ways in which markets and market-based activity can be used for the good of society (Davis, ). Corporations and capitalism—our current economic system based on the private ownership of the means of production, distribution, and exchange, working along principles of competition to maximize profits—face a serious crisis of legitimacy. In this chapter, we introduce social entrepreneurship as an alternative organizing model that harnesses market-based activities to create social impact and drive social change. Social entrepreneurship involves “the innovative use and combination of resources to pursue opportunities to catalyze social change and/or address social needs” (Mair and Martí, , ) and relies on economic profits to sustain this process. Today, social entrepreneurship is still mostly associated with a specific type of organization, social enterprises. These bring new and unconventional approaches to intractable societal issues such as long-term unemployment, social and financial inequality, or changing career structures and family needs. However, viewing social entrepreneurship as a process makes explicit that it is not limited to a specific legal form; it is, in fact, carried out by a diverse range of for- and non-profit organizations across a range of issues, mobilizing different resources and commercial and noncommercial activities (Seelos and Mair, ). Research has shown how social enterprises build and rebuild markets to facilitate equal access to economic opportunities when these are largely absent, such as in developing countries or peripheral regions (Mair et al., b). Constructing markets includes changing norms and rules that prevent participation; as such, markets become a means to break with entrenched patterns of economic and social exclusion. These newly crafted structures, for instance, allow women to obtain financial literacy or free people from social dependencies that perpetuate poverty and unequal access to muchneeded health services. Similar to corporate activity, social entrepreneurship is often based on the private ownership of the means of production. It entails elements of conventional entrepreneurship, such as the production and delivery of products and services, but it also stands apart from it. However, it also provides a platform for making markets and capitalism more inclusive by organizing market activity around a specific social problem. We currently observe growing interest in social entrepreneurship across the corporate, civil, and public sectors in developing and developed countries alike. Social entrepreneurship has emerged as a focal point for revived hopes in the ability and innovativeness of private sector organizations and markets to address social problems and encourage social change (Mair and Martí, ; Seelos and Mair, ). The motives for this enthusiasm are diverse. Policy-makers, for example, turn to social entrepreneurship and social enterprises to ignite a spirit of innovation in how social services are delivered. They also look to social entrepreneurship to safeguard a social sector under duress from austerity in public budgets and emerging needs from demographic and occupational changes. Corporations see social entrepreneurship’s potential to inform new business models that allow for the parallel pursuit of social and economic goals (Huysentruyt et al., ; Battilana, ). Over the last fifteen years,

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 



research has established the relevance of social entrepreneurship, explored various scope conditions, and highlighted some of its inherent challenges (Dees, ; Battilana and Lee, ; Stephan et al., ). In this chapter, we build on these discussions to examine important features inherent in this organizing model and implications for using markets as means to effect social change. We compare and contrast social entrepreneurship with corporate approaches to social change and offer a critical outlook on some of the prospects and the sustainability of social entrepreneurship in contemporary capitalism. We argue that corporations would benefit greatly from a deep understanding of assumptions and workings of models pioneered and carried out by social enterprises, even as the motives for social engagement in the corporate sector are diverse and contested (Aguilera et al., ). The main point we try to convey in this chapter is that the promise of social entrepreneurship for an alternative future of capitalism lies less in transferring elements of these models to the corporate sector. Instead, we argue that taking social entrepreneurship seriously,—understanding the assumptions and features of organizing involved—will allow for a more productive discussion on the role of corporations in society and might be helpful to revise and craft an economic system that can mitigate or even prevent social problems. Corporations increasingly seem to care about addressing social problems. According to the Financial Times, the Fortune  corporations alone spent $ billion on corporate social responsibility initiatives (CSR) in  (Smith, ). Questions about why, how, and with what effect these resources are invested are pertinent. Addressing and responding to questions of social impact becomes increasingly relevant as spending alone does not allow corporations to deal with external pressures to take on responsibility for co-creating social problems and to explore new market opportunities. Analyzing and understanding the assumptions and organizing models related to social entrepreneurship can help corporations to develop their unique social impact strategies and inform their business models.¹ First, paying attention to how social enterprises frame problems and identify problem spaces (Seelos and Mair, ) can inform an analysis of how resources such as money and in-kind donations, but also emerging forms of social innovation, relate to the problems they are supposed to tackle and the outcomes they (fail to) achieve. Second, market activity associated with overcoming social problems, particularly in sections of society traditionally not served by markets, may offer untapped profit opportunities for the corporate sector, even as such opportunities come with significant and unconventional challenges. Social entrepreneurship offers many insights into how economic activity at the bottom of the pyramid can be organized and how new alliances to achieve social and economic goals can be formed (Seelos and Mair, ). Finally, and more broadly, the study of social entrepreneurship and social enterprises offers important insights into how organizing for multiple, potentially conflicting goals can be achieved, including the design of organizational ¹ We use the term organizing models when we refer to social entrepreneurship to highlight that profit generating activities are a means to a (social) end.

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

    

structures and processes that sustain a focus on both social and economic outcomes (Ebrahim et al., ).

L  C E T S P

.................................................................................................................................. Why is it so difficult for corporations to address social problems and drive social change through their own activities? CSR initiatives in particular often fall short in achieving meaningful progress on social issues, even as corporations seem well positioned to produce innovative solutions (Wijen, ). Existing literature in management has identified several factors that impede the ability of corporations to carry out activities addressing social problems, even those of systemic and global importance (Bansal et al., ). We identify three sets of factors related to problems, practices, and motives that impede the effectiveness and efficacy of corporate social initiatives and discuss where social entrepreneurship diverges along each of these factors.

The Nature of Social Problems The first factor that inhibits corporations to effectively address societal challenges pertains to the nature of social problems. These problems hamper economic and social development and include different forms and manifestations of inequality and poverty. These problems are complex—they are rooted in multiple, interrelated causes that cannot be easily tied to particular consequences and solutions (Rittel and Webber, ). As such, corporations typically struggle to determine pathways on how to tackle problems and to assess whether their efforts are effective, even if such problems are perceived as highly salient for firms and stakeholders alike (Wijen, ; Durand et al., ). In addition, social problems are sustained by patterns of behavior nested in and across different institutional levels and domains. For example, inequality is as much the result of unequal political power structures as it is of unequal social standing or income (Mair et al., ). Differences in the ways in which social problems are framed, legitimated, prioritized, and contested across institutional settings enhance this complexity and complicate the search for appropriate and effective approaches. Sociologists have argued that the social construction of problems is deeply subjective, with many societal dysfunctions failing to gain salience (Blumer, ; Hilgartner and Bosk, ). The causal complexity of social problems is at odds with attempts of many corporations to integrate social change into a logic of financial profit-making that prioritizes short-term demands rather than long-term outcomes (Slawinski and Bansal, ).

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 



The Nature of Corporate Initiatives The second factor that inhibits corporations from making progress on social problems relates to the degree to which initiatives are tied to the underlying problem and whether they are actually implemented. Organizational institutionalists have long known that organizations may decouple actual practices from adopted policies and procedures in response to societal demands (Meyer and Rowan, ). CSR scholars, for their part, have exposed multiple manifestations of this process, for example, related to the adoption of stakeholder policies that are non-intrusive to managerial decision-making or those that focus on the more easily remediable symptoms of social problems (Anner, ; Rathert, ). Often, corporations exacerbate social problems and contribute to their persistence, for example, in relation to climate change or child labor, or when they fail to serve groups that appear outside of traditional profit opportunities (Seelos and Mair, ; Wright and Nyberg, ). Adoption may be motivated by an urgent need to counteract and contain legitimacy-threatening public outcry over corporate practices (King, ; McDonnell and King, ). More recent discussions on the phenomenon of decoupling also suggest a divergence between implementation and the intended outcomes of a given initiative (Bromley and Powell, ). Such “means–ends decoupling” is directly influenced by the causal complexity of social issues, in that organizations fail to understand whether and how their practices affect a problem. In real life, this concept manifests in corporations adopting and implementing practices that have unintended consequences for target groups. For example, many CSR initiatives focus on categorical bans of particular social practices such as child labor (Wijen, ; Rathert, ), failing to recognize how such practices are expressions of deeply rooted patterns of inequality supported by a wide range of formal and informal institutions (Mair, et al. b).

The Drivers of Corporate Initiatives The third factor that accounts for the limited success of corporate action to drive social change relates to motives. Studies assessing why corporations adopt particular practices bring to the fore the reactive or instrumental nature of many corporate social initiatives. Such studies have shown how corporate social engagement remains contingent on external factors such as the intensity of social activism, the salience of issues in the public discourse, or different levels of stakeholder salience (King, ; McDonnell et al., ; Jackson and Rathert, ). Building on these insights, recent work has looked more deeply into the possibility of a fundamental mismatch between existing corporate business models and the pursuit of social change. This research has shown how demands for corporate engagement in social problem-solving are “translated” into a business model logic that allows corporations somehow fit these initiatives into the pursuit of economic profit (Hahn et al., ; Slawinski and Bansal, ). Popular discourse in applied management promotes interpreting such pressures through a

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    

managerial lens of “win-win” scenarios, suggesting that corporate social engagement should be integrated into business operations to the extent to which it can be monetized simultaneously (Porter and Kramer, ). This casts significant uncertainty on the feasibility and sustainability of corporate efforts in solving social problems when profit-making and social objectives become incompatible. A recent case study in the area of climate change shows that when corporate initiatives make apparent the tensions and incompatibilities between social and economic goals, corporations resort to various practices by which social goals fade into the background (Wright and Nyberg, ).

S E   A O M

.................................................................................................................................. As we have shown, the efficacy and effectiveness of existing corporate social change initiatives and paradigms are impeded by a set of factors, many of which are tied to the underlying difficulties of addressing social problems as an explicit, shared, and desired goal of corporate organizing. In contrast to corporate approaches that frame social problems as a subordinate goal to economic profitability, social entrepreneurship constitutes an organizing model that places these social problems at its core. In this section, we discuss the different elements inherent in the social entrepreneurship organizing model. We elaborate on the nature of social problems as anchoring organizing efforts and the necessity to integrate multiple goals. We emphasize governance implications and conclude this section by highlighting variance across different institutional contexts.

Social Problems as a Point of Departure Social entrepreneurship seeks to overcome social conditions that work to the detriment of particular—often marginalized—individuals and groups in society, altering their social, economic, and political day-to-day realities at the local level (Mair, ). As such, social problems are at the core of the organizing model of social entrepreneurship. Understanding the causal architecture and unpacking the institutional fabric that underpins a given problem are integral for structuring the activities and processes of social enterprises (Lawrence et al., ). Before discussing these linkages in more detail, it is helpful to recall some sociological insights on the nature of social problems. Social problems are conditions that are recognized as deplorable and as requiring action by actors in the public sphere and beyond (Gusfield, ; Blumer, ). We propose two processes that are helpful to further our understanding of the implications of social problems for organizing: problem salience and problem attribution. Both salience and attribution affect the public face of a social problem and whether social entrepreneurship enjoys legitimacy.

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 



Problem salience refers to ways in which problems come to receive attention as an issue in a given institutional context, such as whether a condition is seen as a local or global issue, as well as its degree of urgency and demand (Hilgartner and Bosk, ). Salience implies that a social condition must receive some attention among the many possible public issues to be considered a problem. Accordingly, social enterprises may target highly salient issues that are recognized as problematic by different parts of society. For instance, work integration social enterprises (WISEs) develop organizing models that seek to reintegrate people into labor markets. Their efforts are actively promoted by public officials and regulators across countries (Defourny and Nyssens, a). Other highly detrimental social conditions and problems often remain unrecognized even by the very groups suffering from them, or resist attempts to address them (Vakili and McGahan, ). Mair and colleagues document this by showing how social problems are often nested in daily behavior and institutionalized patterns of interaction (Mair and Martí, ; Mair et al., b). Norms and beliefs that underpin those patterns are shared and accepted by all members of society. For example, drawing on the work of social enterprises in rural Bangladesh, the authors find that the marginalization and exclusion of women and the so-called “ultra-poor” from market transactions is deeply ingrained in societal norms, taken for granted by all members of society and enacted in everyday life. Problem attribution, on the other hand, refers to the processes by which a salient social problem falls into a specific societal domain or sector. Attribution relates both to the actors deemed responsible for addressing the problem and the legitimacy of a proposed solutions in what Gusfield (, ) calls the “culture of public problems” of modern societies. Problems and the responsibility for problem-solving are usually attributed to one or more particular societal domains. For example, welfare systems in the Western world usually display a mix of different sectoral efforts (public, private, non-profit) providing legitimized solutions to social problems (Seibel, ). The framing of social problems as conditions requiring social entrepreneurial action— rather than, say, the efforts of public administration—will be characterized by different degrees of consent in different contexts. Social entrepreneurship often consists of unconventional approaches that represent competition for incumbent organizations which have delivered goods and services in an area for decades, if not centuries. In other words, they face competing claims from organizations with “ownership” (Gusfield, ) of particular solutions. For example, the social problem of homelessness can be attributed to the economic or social domain. It may be approached by models that secure shelter and cater to basic needs or by models that focus on inclusion in the labor market. Depending on attribution, the legitimacy of an organization in dealing with the problem of homelessness and proposing particular solutions may be questioned. Likewise, changing occupational models and new technology have led to the involvement of social enterprises in different facets of primary and secondary education. These organizations introduce alternative approaches to the issue of changing education demands and confront varying degrees of state and private actor involvement in education across contexts.

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    

Social Entrepreneurship as Organizing for Multiple Goals Social entrepreneurship centers on the mission of alleviating and overcoming social problems, many of which are either unrecognized by those suffering from them or whose solutions are resisted by influential actors such as local elites. How, then, do social enterprises go about this work in what often seem highly constrained contexts? A characterizing feature of social entrepreneurship that is helpful to recall when addressing this question is the pursuit of and necessity to organize around multiple, interdependent goals. Many of these goals represent intermediate steps toward overcoming a social problem. Hence, organizational goals do not solely refer to a dichotomy of commercial and social goals, but include multiple social objectives. Goals integral to the social entrepreneurship organizing model include making social problems salient, legitimizing solutions, identifying and exposing target populations, and devising and deploying activities by which change is to be achieved (Mair et al., a). Mair et al. (), for example, show how a social enterprise pursues the goals of access to clean water and sanitation and reduced levels of inequality in parallel. They identify “scaffolding” as a critical process to drive social change, which entails the mobilization of different resources (such as coopting community rules and structures) and the stabilization of newly established patterns of behavior in communities through enforcement. Scaffolding—and the pursuit of multiple and often conflicting goals— requires, at times, the concealment of the contested goals from powerful incumbents that support and benefit from the status quo (Mair et al., , ). In sum, social entrepreneurship is about the recognition that the complex and incremental nature of social change requires unconventional organizational action by design, breaking with existing social categories (Mair et al., a; Durand and Paolella, ). The multiplicity of goals and the unconventionality of social entrepreneurship require that organizations creatively design solutions and models of organizing around social problems. This is particularly relevant as external support is not readily available and current labor and financial markets are not yet designed for social enterprises. As a result, most social enterprises engage in “bricolage” (Mair and Martí, ; Lévi-Strauss, ), a purposeful recombination and/or repurposing of existing resources and ideas. Bricolage does not solely refer to the recombination of material resources but also involves ideational resources, especially as social problems manifest at the interface of different institutional domains. For instance, income inequality in developing countries manifests and is continually reinforced by diverse factors such as myths about particular groups in society, unenforced regulation, and customary practices (Amis et al., ). As Mair and Martí () show in the case of one social enterprise in Bangladesh, bricolage in the context of extreme poverty and financial illiteracy first entailed a recognition that instruments such as microfinance were not available to these societal groups. The financial empowerment of these groups required recombining and repurposing community traditions of “caring for the poor,” making available educational resources, and offering employment in the spirit of religious norms that allowed for female employment under specific circumstances. In other

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contexts, bricolage may involve a recombination of past organizational building blocks (Schneiberg, ). For example, social enterprises in the field of renewable energy across Europe have reactivated the cooperative as an organizational form to address problems related to consumer participation and environmental protection in energy creation.

Social Entrepreneurship and Governance Social entrepreneurship entails the practice of bricolage and requires organizational structures and processes that allow organizations to continually reflect on how their varied and multidimensional goals—including making problems salient, justifying proposed solutions, and reconciling commercial activities and beneficiary empowerment—are achieved. All of these activities are part of a conscious effort to effect change in institutionalized patterns of behavior and cannot be decoupled from this goal. Yet these activities also play out in contexts of fundamental uncertainty about whether problems are appropriately framed, whether solutions have unintended consequences, and whether members of the organization feel comfortable with particular activities (Seelos and Mair, ). For this reason, social entrepreneurship often includes creative governance arrangements that ensure accountability to the organizational mission, the beneficiaries, and the funders, as well as diverse expertise related to the different organizational goals. Though little systematic evidence exists, we know from exploratory studies that beneficiary involvement and a tight coupling between organizational activities and social mission is achieved, for example, through board membership and advisory bodies that include target groups. Legal forms can affect these endeavors in that for-profit organizational forms, for example, display a stronger emphasis on business backgrounds in their board members (Mair et al., ), inviting possible tensions in how goals are achieved. Governance in social entrepreneurship entails the maintenance of plural objectives and the continuous resolving of accountability to beneficiaries, funders, employees, and other stakeholders, all of which have different ways to make their voices heard (Anheier and Krlev, ). Building the organizational instruments by which this can be achieved is a key challenge that social enterprises tackle in different ways, for example through recruiting and on-the-job training, as Battilana and Dorado () document.

Social Entrepreneurship across Context Effective organizing models of social entrepreneurship build on a deep engagement with local conditions sustaining a particular social problem (Seelos and Mair, ). The central role of social problems and their local manifestations suggest various paths to social impact for social enterprises. By spanning multiple societal domains (Battilana and Lee, ), social entrepreneurship takes place amidst overlapping, potentially

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    

conflicting institutional prescriptions that shape a social condition. For instance, federal regulation may stipulate equality, while local customs and traditions dictate exclusion of certain groups from social and economic processes (Mair et al., b). Research shows that, for example, microfinance has an uneven impact on female inclusion into markets across different contexts based on the pervasiveness of patriarchy norms in sectors and countries (Zhao and Wry, ), reiterating the importance of institutional context for social entrepreneurship. Correspondingly, emerging systematic data on social enterprises reveal a bourgeoning variety of legal forms, operating modes, and organizational structures across different countries, all captured under the umbrella term of social entrepreneurship (Huysentruyt et al., ). The social entrepreneurship organizing model is thus one that requires paying attention to the specific institutional, cultural, and task environment within which social change is enacted. Social entrepreneurship also interacts with diverse support structures across different contexts (Stephan et al., ; Zhao and Lounsbury, ). In some contexts, social enterprises can build on traditions of a “social economy” (Defourny and Nyssens, b); in others, they operate in resource-scarce, hostile environments (Mair and Martí, ). This dichotomy does not neatly match the distinction between industrialized and developing contexts. While social enterprises often introduce their services in contexts where none existed before (e.g. offering financial resources to ultra-poor populations), they also challenge the approaches of incumbents to provide solutions to social problems in resource-rich welfare states, implying distinct kinds of power dynamics. The bricolage nature of these endeavors, where activities and challenges unfold simultaneously, is also reflected in the pluralism of organizational forms that can be found across countries. Social enterprises appear as for-profit, non-profit, or mixed legal entities (Defourny and Nyssens, a). Accordingly, addressing the efficacy of social entrepreneurship to achieve social change needs to consider the context of its activities, which to an extent eschews standardized evaluation approaches and common metrics. Going forward, assessing the interactions of contexts and the organizing strategies of social enterprises will prove important to further unpack how and why social entrepreneurship generates impact.

S E  P  C I

.................................................................................................................................. Social entrepreneurship rests on efforts to understand the causal architecture of a social problem in order to achieve societal progress. Social entrepreneurs build organizational solutions for problems by combining and recombining conventional and unconventional elements from their contexts into structures and processes—a process referred to as bricolage. This bricolage is one of the key strengths of the organizing model characterizing effective social entrepreneurship. Although we increasingly observe rationalization efforts in social entrepreneurship—visible in the increasing pressures to measure impact and to

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

professionalize—social enterprises tend to retain a diverse set of practices, measurements, and evaluation schemes (Molecke and Pinkse, ). This stands in contrast to strong tendencies in the corporate sector to standardize social initiatives through subordination to particular evaluation criteria, promoted by an increasing number of industry and lobby associations devoted to social purposes (Pope and Lim, ). Whether, how, and in what way social entrepreneurship can complement, substitute for, or inspire corporate efforts towards social change is an open question at this point. Answering this question, we think, can inform how to address some of the barriers inherent in contemporary capitalism in addressing social problems going forward. In this chapter, we have distilled a number of key differences of social entrepreneurship to the approaches embodied in corporate social initiatives. We have done so by pointing to the central place of social problems in the organizing model, by discussing how organizational structures and activities are focused on understanding and overcoming a problem, and by emphasizing the deeply contingent nature of this organizing model. Understanding the assumptions and principles of organizing that underpin social entrepreneurship helps to develop a more realistic perspective of learning opportunities for the corporate sector. More specifically, it provides no room for illusions on what can and what cannot be carried over to the corporate sector, for example, more inclusive governance arrangements. In this chapter, we deliberately avoided talking about best practices and aspirational concepts such as shared value (Porter and Kramer, ). Instead, we have highlighted social problems, organizational practices, and motives as entry points to develop a useful understanding of social entrepreneurship organizing models. Doing so highlights the actual work in which corporations have to engage in order to become effective problem-solvers of many detrimental conditions associated with contemporary capitalism. Corporations alone will not be able to do this and we will need to engage in a collective effort of institutional innovation to get closer to an ideal scenario of inclusive and sustainable capitalism.

S E: R G  O

.................................................................................................................................. The study of social entrepreneurship has moved from examining the scope of the phenomenon and definitional debates (see e.g. Zahra et al., ) towards theorizing and empirically examining how and to what effect markets can be used for social goals. As an empirical setting, social entrepreneurship has inspired a productive research stream to study the feasibility of “hybrid” organizing, whereby organizational elements originating from different societal domains are combined (Battilana and Lee, ). Future research will need to adopt creative approaches to build databases that allow us to analyze motives, activities, and outcomes related to social entrepreneurship more systematically and more effectively. These efforts may take a more interdisciplinary approach and apply a broader set of methods including panel surveys and lab

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

    

experiments (e.g. Andersson et al., ) to help validate findings developed through inductive and case-based research, and identify contingencies to unpack causal arguments more succinctly. Such efforts will be helpful to conduct comparative studies across sector and overcome the limitation of research that locates social entrepreneurship as a phenomenon restricted to the social sector. Social entrepreneurship has further led to a re-engagement with conceptions of institutional context in organization studies by shining a light on the “nestedness” of social issues across institutional levels and domains (see e.g. Mair et al., b). This includes local manifestations of social issues, but also their macrofoundations—the political-economic circumstances that shape the daily activities of social entrepreneurs active at the intersection of markets, state action, and civil society (Zhao and Wry, ; Seibel, ; Seelos et al., ). Taking into account the abundance of formal and informal rules in institutional contexts, theories of social entrepreneurship will need to incorporate various contingencies stemming from institutional contexts to understand conditions under which such organizing models generate desired outcomes and how institutional change is achieved. Going forward, researchers interested in social entrepreneurship are tasked with building theories of why social entrepreneurship emerges and how it leads to outcomes of interest. The study of social entrepreneurship further reminds us of the ongoing need in organizational theory to reconcile explanations centering on organization-level factors (e.g. social enterprises’ desire and ability to change societies) with those prioritizing context-level factors (e.g. the legitimacy of an organizing model). These theories will need to carefully evaluate the appropriateness of searching for universal links between organizational features and outcomes, where important differences between organizations and across their institutional contexts are obscured at the expense of averages across populations (King et al., ). The vast literature on the link between CSR and financial performance serves as a cautionary tale for such an endeavor (for a critique see Aguilera et al., ). The research approach we advocate here will help to avoid casting social entrepreneurship as a panacea for the problems of contemporary capitalism by developing theory that is sensitive to the vast differences of contexts in which these organizations operate.

R Aguilera, R., Rupp, D., Williams, C., and Ganapathi, J. . Putting the S back in corporate social responsibility: A multilevel theory of social change in organizations. Academy of Management Review, (), –. Aguilera, R., Filatotchev, I., Gospel, H., and Jackson, G. . An organizational approach to comparative corporate governance: Costs, contingencies, and complementarities. Organization Science, (), –. Amis, J., Munir, K. A., and Mair, J. . Institutions and economic inequality. In R. Greenwood, C. Oliver, T. B. Lawrence, and R. Meyer (eds), The SAGE Handbook of Organizational Institutionalism, –. Thousand Oaks, CA: Sage.

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 

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Rathert, Ns. . Strategies of legitimation: MNEs and the adoption of CSR in response to host country institutions. Journal of International Business Studies, (), –. Rittel, H. W. J., and Webber, M. M. . Dilemmas in a general theory of planning. Policy Sciences, (), –. Schneiberg, M. . What’s on the path? Path dependence, organizational diversity and the problem of institutional change in the US economy, –. Socio-Economic Review, (), –. Seelos, C., and Mair, J. . Social entrepreneurship: Creating new business models to serve the poor. Business Horizons, (), –. Seelos, C., and Mair, J. . Profitable business models and market creation in the context of deep poverty: A strategic view. Academy of Management Perspectives, (), –. Seelos, C., and Mair, J. . Innovation and Scaling for Impact: How Effective Social Enterprises Do it. Stanford, CA: Stanford University Press. Seelos, C., Mair, J., Battilana, J., and Dacin, M. T. . The embeddedness of social entrepreneurship: Understanding variation across local communities. Research in the Sociology of Organizations, , –. Seibel, W. . Welfare mixes and hybridity: Analytical and managerial implications. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, (), –. Slawinski, N., and Bansal, P. . Short on time: Intertemporal tensions in business sustainability. Organization Science, (), –. Smith, A. . Fortune  companies spend more than $bn on corporate responsibility. Financial Times, Oct. . Stephan, U., Uhlaner, L. M., and Stride, C. . Institutions and social entrepreneurship: The role of institutional voids, institutional support, and institutional configurations. Journal of International Business Studies, (), –. Vakili, K., and McGahan, A. M. . Health care’s grand challenge: Stimulating basic science on diseases that primarily afflict the poor. Academy of Management Journal, (), –. Wijen, F. . Means versus ends in opaque institutional fields: Trading off compliance and achievement in sustainability standard adoption. Academy of Management Review, (), –. Wright, C., and Nyberg, D. . An inconvenient truth: How organizations translate climate change into business as usual. Academy of Management Journal, (), –. Zahra, S. A., Gedajlovic, E., Neubaum, D. O., and Shulman, J. M. . A typology of social entrepreneurs: Motives, search processes and ethical challenges. Journal of Business Venturing, (), –. Zhao, E. Y., and Lounsbury, M. . An institutional logics approach to social entrepreneurship: Market logic, religious diversity, and resource acquisition by microfinance organizations. Journal of Business Venturing, (), –. Zhao, E. Y., and Wry, T. . Not all inequality is equal: Decomposing the societal logic of patriarchy to understand microfinance lending to women. Academy of Management Journal, (), –.

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  ......................................................................................................................

         ......................................................................................................................

 .    . 

B S F P A

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The BoP Proposition T base (or bottom) of the pyramid (BoP) proposition holds that corporations can alleviate global poverty by profitably selling goods and services to the poor. Central to the notion that firms can “do well by doing good” is that BoP populations are a massive, untapped market of billions of consumers living on less than $ per day (Prahalad, ; Prahalad and Hammond, ; Prahalad and Hart, ). While firms will need to be price sensitive because of limited consumer purchasing power, the proposition holds that, by accessing the billions of individuals in this untapped market, firms can attain scale that will generate profits. In turn, access to improved goods and services can provide the poor with improved health, nutrition, entrepreneurial drive, and self-esteem. The early BoP literature focused on identifying both the proposition and which activities separated successful firm BoP initiatives from unsuccessful initiatives (London and Hart, ). Prominent examples featured cases such as CEMEX’s Patrimonio Hoy, an innovative house-building program in Mexico. Under this initiative, poor residents can buy ready-made cement and all the supplies needed to build a home or add rooms to existing homes. A cornerstone of the Patrimonio Hoy program is a mechanism by which the poor can save money for building supplies and establish

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     



credit in order to finance the acquisition of materials ahead of payment (Prahalad, , ). Another prominent case is Hindustan Lever Limited—the subsidiary of Unilever in India—which educates BoP consumers about the importance of hygiene in the prevention of diarrheal disease and then sells them soap and other products (Karnani, a; Prahalad, , ). More recent literature on the BoP proposition discusses how theories of firms can be better leveraged to increase opportunities for profit generation at the BoP (Hart et al., ). For instance, Hart and colleagues discuss the limitations of stakeholder theory in BoP contexts and argue that too much focus is placed on those stakeholders (e.g. investors, employees, customers) who affect the current business model. Little attention is given to how firms can access fringe stakeholders and shape future business models (Hart et al., ). The authors suggest integrating theories that emphasize how identifying innovations in new markets can lead to disruption of current knowledge and focus on identifying strategies for future competitive advantage. With a focus on the future, a new BoP proposition—BoP .—has emerged with a focus on open forms of innovation that stress “the importance of co-creating products with underserved communities . . . suited to the unique features of the underserved space” (Hart et al., , ). The view that firms should work more closely with local members and focus on co-creating solutions is comparable to Prahalad’s principle of “democratizing commerce” or bringing the benefits of globalization to all micro consumers, micro producers, micro innovators, micro investors, and micro entrepreneurs (Prahalad, , ). Through active participation of the poor themselves and the innovation of firms, co-created solutions can provide a “win-win” venture that aids poverty alleviation and increases profits.

Criticisms of the BoP Proposition Despite the apparent benefits of the BoP proposition, scholars have articulated numerous critiques of the proposition on empirical, conceptual, and ethical grounds. Karnani (b) points out that the original BoP proposition overstated the size of the BoP market opportunity. Prahalad () claims that there are  billion poor who live on less than $ per day. However, Arnold and Valentin () utilize World Bank data to identify the total number of people living below $ a day as . billion (see Figure .). Following standard usage in development economics, they differentiate between the . billion people living in moderate poverty, who earn between $. to $. per day, and extreme poverty, or the . billion people earning less than $. per day. Inconsistent with Prahalad’s description, the  billion people comprising the base of the economic pyramid do not all live on less than $ per day. The  billion members of the BoP include the moderately and extremely poor as well as an additional . billion people living on $.–$. per day. By overstating the size of the population living on $. per day, the overall potential market size is also overstated. Given the limited size of those who truly live on less than

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

 .    . 

Tier 1 Tier 2 Tier 3 BOP 4 billion people below $9.05 per day

Tier 4 Tier 5

• > $60.36 per day • 0.3 billion people • $9.05 per day - $60.36 per day • 1.4 billion people • 1.4 billion people • $2.00 per day - $9.05 per day • Moderate Poverty • 1.2 billion people • $1.25 per day - $2.00 per day • Extreme Poverty • 1.4 billion people • accessed June . Utting, P. . CSR and equality. Third World Quarterly, (), –. Vogel, D. J. . Is there a market for virtue? The business case for corporate social responsibility. California Management Review, (), –. Wang, L., and Juslin, H. . The impact of Chinese culture on corporate social responsibility: The harmony approach. Journal of Business Ethics, (), –. Wartick, S. L., and Cochran, P. L. . The evolution of the corporate social performance model. Academy of Management Review, , –. Wartick, S. L., and Mahon, J. F. . Toward a substantive definition of the corporate issue construct a review and synthesis of the literature. Business and Society, (), –. Webb, J. W., Tihanyi, L., Ireland, R. D., and Sirmon, D. G. . You say illegal, I say legitimate: Entrepreneurship in the informal economy. Academy of Management Review, (), –. Wettstein, F. . CSR and the debate on business and human rights: Bridging the great divide. Business Ethics Quarterly, (), –. Wood, D. J. . Corporate social performance revisited. Academy of Management Review, , –. World Health Organization (WHO). . Global health workforce alliance: Members and partners. Generva: WHO. accessed June . Yin, J., and Zhang, Y. . Institutional dynamics and corporate social responsibility (CSR) in an emerging country context: Evidence from China. Journal of Business Ethics, (), –. Zhao, M., Park, S. H., and Zhou, N. . MNC strategy and social adaptation in emerging markets. Journal of International Business Studies, (), –. Zyglidopoulos, S., Williamson, P., and Symeou, P. . The corporate social performance of developing country multinationals. Business Ethics Quarterly, (), –.

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Note: Tables and figures are indicated by an italic ‘t ’ and ‘f ’, respectively, following the page number. M   Lumber , –  Best Companies to Work For 

A

Accenture t, ,  accountability environmental law  mandatory corporate sustainability reporting  multinational corporations (MNCs) in Africa  mutual –,  profit-with-purpose corporations , , ,  social movements ,  strategy , , ,  activism environmental ,  grassroots  social  see also rhetorical strategies (activists) Acumen - Technical Assistance Initiative Summits (East and West Africa)  adaptive behavior  advocacy/lobbying behaviors t, ,  Africa , , , ,  see also multinational corporations (MNCs) in Africa AfricaWorking  agreeableness –, ,  agricultural sector , –t, –,  AirB&B  Algeria  alienation of workers  altruistic CSR , ,  Amway 

Anglia Ruskin’s Centre for Enterprise Development and Research (UK)  Angola ,  Anthropocene perspective –,  anti-apartheid movement –,  Apparel Industry Partnership/Fair Labor Associations  apparel industry and working conditions , –, , ,  appraisals , , , , ,  archival datasets – correspondence/representativeness with constructs of interest  Cronbach’s alpha  databases –, –t Asset ESG data (Thomas Reuters) , , , –, t Bloomberg ESG , , , t, t BoardEx , –, t Carbon Disclosure Project (CDP) , –, t Dutch Sustainability Ratings (DSR) – EIRIS  European Pollutant Release and Transfer Register (E-PRTR) , –, t FTSEGOOD  Global Reporting Initiative (GRI) , , t Institutional Shareholder Services  KLD (Kinder Lydenburg & Domini) , –, , , , t MSCI data , , , ,  RobecoSAM Corporate Sustainability Assessment (CSA) , , –, , t Socrates 

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



archival datasets (cont.) Sustainable Investment Research International (SiRi) – Sustainalytics , , , , t, , t Sustainalytics Sustainability Global Platform (SGP) – Toxic Release Inventory (TRI) ,  Trucost Environmental Performance scores , , –, t data compilation process – measurement error – methodological issues , – autocorrelation , – measurement error – reliability , ,  validity , , – ARESE (France)  Ashoka  Asia ,  South  Southeast  Aspiritech t assessments , –, ,  negative , , ,  positive ,  ASSET , , , , –, t ASX t attributions –, , –, , –, –, ,  causal  extrinsic  intrinsic  meaningful work – negative –, , , ,  positive , , – problem – ‘sticky’ – theory , – auditing , , ,  Australia , , ,  Austria  authenticity , –,  automobile emissions  autonomy , ,  avoidance of harm , t, –, , , , –

Avon , t,  awareness of CSR see under psychology of CSR AXA t, 

B

Babson College – backfire effects: stakeholders’ negative responses , – attribution theory , – business imperative  consumers –t, – CSR versus CSiR – cynicism , –,  consumer  employee or organizational  political  trait  emphasis to date on positive effects of CSR – employees t, – evidence of negative reactions –, –t factors reducing risk of – cross-cultural and comparative research – CSR communication conundrum – examination and comparison of different dimensions of CSR – honesty and authenticity –, ,  information source credibility  fit  image  integrated frameworks – job seekers t, – justice theories and principles  other-centered attributed motives ,  positive responses – skepticism , –, , ,  stakeholders t suspicion  backlash, fear of ,  Balanced Scorecard ,  Bangladesh ,  sanitation program  Savar building collapse  banking industry , –t, –, , 

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 Barclays t, , , ,  Building Young Futures project  enterprise development  Ready to Work  Technical Assistance Initiative Summits (East and West Africa)  Barclays Africa ,  base of the pyramid proposition (BoP) –, – BoP .  business education  business strategies for poverty alleviation – co-creation of strategies and products with BoP members – criticisms – current business model  deep and wide relationships  dignity  direct and indirect consequences  education and training  entrepreneurship and job creation  environmental sustainability and extreme poverty – inter-institutional distance  intra-institutional distance  local franchising  local, non-corporate partners, collaborations with – microfinance – NGOs  organizational structure and managerial practices  price-setting – producers – productivity constraints  transactional constraints  behavioral impact of CSR initiatives  beliefs, prior – Ben & Jerry’s , ,  benchmarking –, ,  benefit corporations , , , ,  Benetton  best practices  environmental  see also best practices from humanitarian aid to evaluate CSR



best practices from humanitarian aid to evaluate CSR – activity embeddedness – adaptive preferences  attitudes, positive  benefit maximization – collective effectiveness  coordination of efforts – criteria for evaluation of impact – alignment t, –, , ,  harmonization t, – managing for results t, –, – mutual accountability t, – ownership t, – Paris Declaration on Aid Effectiveness Principles –, t dependency  evaluation of CSR’s impact on intended beneficiaries – evidence-based assessments of programmatic effectiveness – for-profit organizations, importance of to human progress – goals  indicators  interrupted time-series or regression discontinuity designs  managing for results – more than just good intentions – dimensions of initiatives f not all initiatives are created equal – outcome evaluations  privilege  quasi-experimental designs  results sharing  satisfaction  systems  beyond-compliance leadership ,  Bhopal Union Carbide disaster (India) , ,  biases built-in  common-method  implicit  intergroup  potential –

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



biases (cont.) self-serving  social, and power  Bill and Melinda Gates Foundation  Biocellion (US) ,  biodiversity loss ,  Bitcoin and blockchain technology  block grants for economic development  Bloomberg –, , , , , t, t board composition and board size  BoardEx , –, t boundary conditions  see also boundary conditions on effects of CSR on meaningful work boundary conditions on effects of CSR on meaningful work – employees’ agreement with stakeholder expectations, assessments and attributions – employees’ identification with target of attributions – employees’ perceived control over harms and benefits – employees’ perceived personal growth through CSR involvement – bounded rationality  boycotts , , , , , –,  brand fit ,  brand value  Brazil , , , ,  bribery  see also corruption bricolage –,  British Petroleum (BP) Australia  British Petroleum (BP) Deepwater Horizon oil spill , , , , ,  brownwashing  Bush, G. – business judgment rule ,  business model innovations  Business Source Complete database  Business Source Premier  business strategies for poverty alleviation – business as usual , ,  buyer power 

buying preference  buy-outs 

C

Cadbury, J.  Calvert Responsible Indexes (United States)  Cambodia  Cambridge Institute for Sustainability Leadership  Cameron, D.  Cameroon  Canada , –,  corporate environmental and financial performance link t,  oil and gas industry  Social Investment Database  capabilities , ,  deliberative  emerging markets ,  environmental management and strategy –, – organizational – strategy and sustainability  see also strategic environmental management (SEM) capabilities Capital Asset Pricing Model (CAPM)  carbon dioxide emissions –, – Carbon Disclosure Project (CDP) , t, , , –, t care-based considerations – Care International ,  Caribbean countries  Carnegie, A.  Catholic Church and child abuse ,  CCI activities  CECP  CEMEX  Partimonio Hoy house-building program (Mexico) – Central and Eastern Europe  Central and West Africa  CEOs –,  CEO Statement of Support  certification ,  Environmental Management System (EMS) – international t, 

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 Cesareo, K.  charitable giving , , , t, , , ,  see also not-for-profit (NFP) organizations or charities Cherie Blair Foundation  child labor  Chile , ,  China  archival datasets  CEP-CFP relationship t Company Law  corporate volunteering  emerging markets  Guide Opinion on the Social Responsibility Implementation for SOEs  Harmonious Society policy , ,  institutional influences  mandatory corporate sustainability reporting –, –, –, t, , , – Securities Regulatory Commission  Shanghai Stock Exchange (SHSE) ,  Corporate Governance Index  Shenzhen Stock Exchange (SZSE) ,   Index  chloroflurocarbons (CFCs)  Chrysler/Kenosha plant closure  citizenship , , – corporate social irresponsibility (CSiR)  environmental  see also organizational citizenship behavior (OCB) civil rights movement ,  civil society corporate volunteering  emerging markets , ,  environmental responsibility  social movements , , , ,  Clean Air Act  clean technology – click-farms  client-directed organizational citizenship behavior (OCB) , t, , – climate change see global warming and climate change



Coalition for Environmentally Responsible Economies (CERES)/Valdez Principles –, , ,  Coase theorem  Coca-Cola , t, , , ,  by program , –,  Annual Sustainability Report ()  DNV GL  EKO-CENTER  Sustainability Report ()  Unleashing the Potential of Women Entrepreneurs report () – Youth Empowered for Success (YES!) program  codes of conduct ,  collaborative engagement –, , ,  collective identity contestation (rhetorical strategies) , –, , –, , , – command-and-control regulations , ,  commitment , , ,  organizational , ,  to innovate  voluntary  commodification-exploitation norms  communication breadth of  channels and strategies  job performance  of policies  strategies, effectiveness of  strategies or information sources  community education/social marketing behaviors t,  Community Health Enterprises  community involvement , , , , , ,  backfire effects ,  community relations ,  comparative advantage ,  Compartamos (Mexican MFI)  competencies , , , , ,  core –,  environmental management and strategy –

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





competitive advantage ,  base of pyramid (BoP) proposition  corporate environmental and financial performance link , – environmental management and strategy  strategy , , ,  compliance and social movements ,  comply or explain clause ,  conflict diamonds – conscientiousness , ,  conscious capitalism movement  Consensus Taxonomy of Counterproductive Work Behavior (CT-CWB)  Consensus Taxonomy of Organizational Citizenship Behavior (CT-OCB)  consequences  unintended  conservation lifestyle behaviors  conservation movement  conserving (employee green behaviors) , t, , –, ,  constraints, internal and external  construction sector , –t, – construct validity ,  consumer(s) attitudes and behavioral intentions  backfire effects , –t, – groups  movements  responsible purchasing intentions and actual purchasing behavior  safety ,  targeting  see also under psychology of CSR content analysis – context-based models  contract labour (de facto slavery)  control-credibility tradeoff  co-regulatory structures ,  corporate culture fit  corporate environmentalism  corporate environmental performance (CEP) ,  see also corporate environmental performance (CEP) and corporate financial performance (CFP)

corporate environmental performance (CEP) and corporate financial performance (CFP) – absolute vs. relative measures – accounting disclosures – contingency factors ,  cost leadership and differentiation  event studies – gate-to-gate vs. lifecycle measures  industrial organization literature , –,  instrumental stakeholder theory , –,  natural resource-based view (NRV) , –t, –,  neoclassical economics ,  nonlinear relationships – organizational context  outcome vs. process measures – partial least squares (PLS) model  perceptual measures  researcher institutional logics as metatheoretical concerns – substitutes/complements  support  theoretical extensions – third-party (expert) ratings  tradeoff hypothesis , – values and norms – virtuous circle  corporate environmental responsibility (CER) ,  corporate financial performance (CFP) , ,  see also corporate environmental performance (CEP) and corporate financial performance (CFP) corporate scandals ,  corporate social irresponsibility (CSiR) , – actions, behaviors or intentions – antecedents , – coordinated culture and leadership  diversity climate  ethical climate – governance – incentive systems 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 leadership – organizational climate – pressure – regulation  bad/negative/causing harm – base of pyramid (BoP) proposition  bias  brownwashing  composite-aggregate measures – benchmarks – context  subjectivity – theoretical rationale – consequences ,  construct deficiency – construct validity  corporate culpability  corporate greening  corruption , ,  costs of events  discrimination  efficacy, ethical  in the eye of the beholder  fraud , , – greenwashing , t, , , – human rights abuses  illegal behaviors  institutional influences  nature of – negative behaviors  noncomplicity  organizational misconduct  organizational support  perceptual measures –, – employee perceptions – managerial perceptions  pollution  practical implications – pressure –,  research implications – retail  rule breaking  self-interest ,  social irresponsibility t subjective nature of  sustainability fraud , t systematic error 



undesirable effect  unidimensional proxy measures – white-collar crime  corporate social performance (CSP) ,  archival datasets  measurement  stakeholder management ,  strategy and sustainability  corporate volunteering , , – background – beneficiary organizations  business case discourse, dominance of – career and personal benefits  corporate philanthropy – employee volunteering/corporate volunteering distinction – employer-supported volunteering – esteem, increases in  formal volunteering  future of – growth of – historical background – home country volunteering  international volunteering , ,  morale ,  nature of CV activities – non-skills-based volunteering  not-for-profit (NFP) organizations or charities , , , – outcomes at individual level – outcomes at organizational level – personal volunteering – political role , – private sector  spiritual benefits  third sector membership , , –,  virtual volunteering  corruption , , , , , –,  emerging markets , ,  social movements  Costa Rica ,  cost-benefit analysis ,  cost leadership, environmental  counterproductive work behaviors (CWB) , 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





creativity , ,  credibility  Credit Suisse  criminal organizations and drug cartels and parallel systems of taxation  cross-sector collaboration  C-S-R (care-based, self-protective and relational-status) considerations framework –, t, , , t,  CSR filter  culpability, perceived  customer(s)  acquisition, improved  corporate social irresponsibility (CSiR)  loyalty  satisfaction ,  welfare  see also consumer(s) cynicism social  see also under backfire effects: stakeholders’ negative responses Czech Republic t

D

data envelopment analysis (DEA)  deception, perceived  decision-making process , – decoupling –, ,  deep ecology movement  de facto business law  deforestation ,  deliberation as problem-solving mechanism  Dell t,  Women’s Entrepreneur Network Summit  Delorier, R.  democratizing commerce ,  Denmark , ,  Bangladesh water sanitation project  Center for Quality in Business Regulation n Financial Statements Act  mandatory corporate sustainability reporting –, –, –, t, , – Minister for Economic and Business Affairs 

developed country MNEs (DMNEs) – ‘digital’ sweatshops  directing principles – direct interactions  directors’ duties  disadvantaged populations  see also entrepreneurship by and for disadvantaged populations disaster relief assistance see humanitarian aid disclosure accounting – of information , –,  see also under mandatory corporate sustainability reporting discretionary assistance  discretionary behaviors , ,  discretionary responsibilities  discrimination  disease reduction (eg HIV/AIDS)  dissenter’s rights  distal-embedded CSR  distal-peripheral CSR  distributive exploitation – diversity/consensus balance  diversity and CSR: top management team/ board/workforce , – advantages  age , , ,  boundary-spanning role  categorization ,  consequences of diversity –, –t country of origin  disability  disadvantages  dissatisfaction  educational background , , ,  effort, enhanced  effort-related advantages – ethnicity and minorities –, , –, –, –,  functional background , , t, t, , , – gender diversity –, , –, –,  industry background ,  invisible forms of diversity (deep-level) , , –t, t, –

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 measurement diversity  micro processes  mindset  miscommunications  moderating factors – perspectives ,  potential benefits – potential difficulties/costs – potential effects on workforce diversity – relations-oriented ,  religion , ,  sexual orientation , , ,  socio-economic background , ,  surfacing of unique information, enhanced  sustainable development goals (SDGs) , –t, , , , – symbolic and motivational effects of observing  task-related diversity ,  team reflexivity  turnover levels  understanding effects of – values , ,  visible forms of diversity –, , t, , –t, –, – DJSI t D. Light - solar-powered lanterns in India  do no harm see avoidance of harm doordoor  double bookkeeping and national accounting  Dow Chemical - Technical Assistance Initiative Summits (East and West Africa)  ‘do well by doing good’ , , , ,  Dow Jones Global Index t Dow Jones Sustainability Index (United States) , , , , t, , ,  Dufil Prima Foods t Dutch East India Company  Dutch Sustainability Ratings (DSR) – dynamic advertising models  dynamic influence of CSR –

E



eco-branding strategy  eco-civic engagement  eco-efficiency –, , – eco-helping  eco-initiatives ,  eco-innovation  economic analysis, role of – economic aspects see triple-bottom line (economic, social and environmental) aspects economic performance  economic production theory  economic responsibilities ,  Edelman Trust Barometer  egoistic- and stakeholder-driven motives  Egypt t,  EIKON  EIRIS  emerging markets , , – alliance  assistance  best practices  capability approach ,  civil rights movement ,  civil society , ,  codes of conduct  collective action initiatives –,  command-and-control regulations  consumer movement  contracting  contract labour (de facto slavery)  corporate citizenship – corporate financial performance (CFP)  corporate social performance (CSP)  corruption , ,  cultural differences – developed country MNEs (DMNEs) – divestment and boycotts  environmental issues  environmental laws  environmental self-regulation  ethical orientation , ,  explicit CSR  factory system  financial performance 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





emerging markets (cont.) firm CSR resources  formal institutions  future research directions – global codes, agreements and standards  global supply chains –,  government ,  historical perspectives – home-country environment of parent company  host-country environment of subsidiary  human rights issues ,  implicit CSR  individual initiatives – industrial clusters –,  informal and illegitimate markets  informal institutions  informal norms and rules  institutional and cultural perspectives –, – institutional theory – institutional voids, filling and provision of public goods ,  institutional duality  institutional level  institutional triality – intergovernmental agreements and initiatives  internationalization  limited-access order (LAO) –,  local community-oriented initiatives  moral behavior and conduct  multi-country, large-N studies  multilateral initiatives  multinational enterprises (MNEs) , , , – multinational enterprises (MNEs) and legitimacy signaling – network theory  non-governmental organizations (NGOs) ,  open-access order (OAO) –,  organizational learning  organizational level  philanthropic activities , , ,  political CSR , 

pollution control initiatives ,  private regulation  qualitative methods  reporting  social activism  social and environmental practices –, , ,  social movements – specialized skills or capabilities  stakeholder connections and networks –, – stakeholder management  stakeholders and interorganizational networks  sustainable development , ,  trade and industry groups  voluntary practices , , , ,  working conditions ,  emissions automobile  see also greenhouse gas (GHG) emissions emotions and emotional stability (employees) , , , , ,  empathy ,  collective  employee externally-directed citizenship – advocacy/lobbying behaviors t, ,  charitable giving , t, , ,  client-directed organizational citizenship behavior (OCB) , t, , – community education/social marketing behaviors t,  definition – dependability facet  dispositional antecedents – efficiency of organization  ethical behaviors  job performance, employee behaviours as  measurement  personality traits  placement of behaviour domains within consensus model of job performance dimensions f responsible behaviours – traits 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 vocational interests and values  volunteering , , t, , ,  see also employee green behaviors employee green behaviors –, –, , – avoiding harm meta-category t, –, , ,  cognitive abilities ,  conserving meta-category , t, , –, ,  context-based models  definition –,  dispositional antecedents – Green Five taxonomy –, –t, – influencing others meta-category –t, , ,  interpersonal skills  measurement – negative behaviors  nonactivist behaviors in public sphere  organizational citizenship behavior (OCB)-based models – positive behaviors  required (task-related) green behaviors – resource-based models – taking initiative meta-category t, , ,  transforming meta-category , t, ,  voluntary (proactive) – employee(s) agreement with stakeholder expectations, assessments and attributions – attitudes  backfire effects: stakeholders’ negative responses , , t, –,  company environmental fit  corporate social irresponsibility (CSiR) ,  CSR communication during point-of-sale interactions  engagement in environmental practices and behavior ,  identification with target of attributions –



job satisfaction, performance and well-being  morale  organizational citizenship behaviors (OCB) – perceived control over harms and benefits – perceived personal growth through CSR involvement – quality of work life  responsible behaviours , – sense of control over environments  stress and withdrawal  training in CSR communications  trust  wellness  see also employee externally-directed citizenship; employee green behaviors; and under psychology of CSR employer(s) familiarity  values  empowerment , –,  psychological –, –, ,  socio-structural –, –,  true  Enactus  Endangered Species chocolate  Endeavour Global  Investor Network  energy efficiency and renewable energy (EERE) , ,  engagement in CSR , ,  enhanced CSR  Enron , , ,  entrepreneurship determinants  enforced  opportunities  see also entrepreneurship by and for disadvantaged populations; Global Entrepreneurship Monitor (GEM); social entrepreneurship entrepreneurship by and for disadvantaged populations –, – access to products/services provision , –t

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





entrepreneurship by and for disadvantaged populations (cont.) agency  business ownership  buy-one-give-one model  by disadvantaged populations – benefits and barriers – corruption – cultural norms and expectations  definition of disadvantaged populations – direct employment (or training for employment) business model t disabilities , , , , , – disadvantaged economies – economic justification  educational attainment , ,  employment  fair trade – for disadvantaged populations: social entrepreneurship – future research agenda – gender –,  income and net worth  market access model t micro-enterprises ,  microfinance ,  minorities and ethnicity and ethnic enclave theory –, –, – out-sourcing  philanthropy business model , t self-employment , , ,  social entrepreneurship models addressing disadvantage –t vulnerability  environmental aspects see triple-bottom line (economic, social and environmental) aspects environmental disasters , ,  see also Bhopal Union Carbide (India); British Petroleum (BP) Deepwater Horizon oil spill; Exxon Valdez oil spill; Love Canal environmental disaster environmental footprint ,  environmental impacts , , –

environmental information see environmental, social and governance (ESG) information environmentalism ,  environmental issues  social movements , –, , , , , ,  environmental law –, –,  accountability  ‘beyond compliance’ approach  business case  business economic perspective – business ethics – command-and-control  de facto business law  directing principles – directors’ duties  emerging markets  environmental responsibility – evaluation – hard law ,  information disclosure , –,  legitimacy –, – mandatory regulation  neo-liberalism, regulatory state and end of command-and-control – peace, order and good governance  philosophy of – polluter-pays principle , ,  precautionary principle – prevention principle –,  principle-based approaches  scope and doctrine of  self-regulation  social license analysis – soft law , ,  stakeholder theory – standards and reporting as regulation by information – stewardship theory – sustainability concept – voluntary, self-regulatory and co-regulatory structures ,  environmentally-directed organizational citizenship behavior (OCB-E) , , –, 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 environmentally harmful behaviors  environmental management and strategy – atmospheric pollution –,  capabilities –, – competencies – corporate action – deadweight costs  economic analysis, role of , –,  environmental movement pressures , –,  Germany , f greenhouse effect – incineration – Japan , f new product development – P innovations – pollution prevention , –, – public attitudes , ,  recycling –,  resource-based view (RBV) ,  scientific and technical information, limitations of , –,  solid wastes –,  source reduction – United States , f, , –, – waste production as by-product of business activity – see also strategic environmental management capabilities Environmental Management System (EMS) –,  certification – environmental movements , –,  environmental norms  environmental overcompliance  environmental performance , , n, , , ,  see also Trucost Environmental Performance Scores environmental practices , ,  environmental problems  environmental productivity  environmental protection ,  environmental regulations see environmental law



environmental responsibility – Anthropocene perspective – capital, cost of  commensurability  covariance matrix  credit constraints ,  dichotomous subjective marginal rate of substitution  emission levels, waste reduction and energy usage  environmental law – future regulations, preempting – intrinsic motivation  investment, environmentally responsible , , – liability and reputation management  macro-economic approach ,  micro-economic approach –, , ,  niche markets  operations management – product differentiation and green consumerism – and pure environmental economics distinction  utility function  environmental self-regulation  environmental, social and governance (ESG) information  archival datasets , , , , – controversies overlay  corporate social irresponsibility (CSiR)  institutional influences  mandatory corporate sustainability reporting ,  research  strategy and sustainability ,  environmental values  EOKOM (Germany)  equal opportunities ,  gender equality , –,  income  same-sex marriage  Equator Principles  equifinality –

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





Ernst & Young t,  Entrepreneurial Winning Women program  Entrepreneur of the Year Award in Eastern Africa  Peace Through Business program (Rwanda)  World Entrepreneur Award-Southern Africa  ethics/ethical behavior in employee externally-directed citizenship  business –,  capital  commitment and discourse in corporate volunteering  considerations  corporate social irresponsibility (CSiR)  deontological  expense reporting  investment funds  leadership  obligations in environmental management and strategy  orientation in emerging markets , ,  principles in profit-with-purpose corporations  responsibilities –, ,  responsibilities and multinational corporations (MNCs) in Africa  standards ,  theory – training  utilitarian  Ethiopia  Europe  archival datasets , t, t corporate environmental and financial performance link t,  corporate volunteering ,  emerging markets  environmental law  environmental responsibility  implicit CSR  institutional influences 

mandatory corporate sustainability reporting  renewable energy  see also European Union European Commission  Horizon  Strategy – European Environment Agency t European Pollutant Emission Register  European Pollutant Release and Transfer Register (E-PRTR) , –, t European Union , , , t evaluation , ,  criteria, type of – formative ,  method/process –,  summative ,  timing – event studies – evolutionary school ,  experimental methods  explicit CSR , ,  exploitation distributive – motivational and procedural – norms  external CSR , n, , ,  externally-directed organizational citizenship behavior (OCB-X) –, , ,  external sources  extractive industries , –t, –, , –,  extraversion , , ,  extrinsic value of work – Exxon Valdez oil spill , –, , 

F

Factiva database ,  factory system  fairness – fair trade , –,  Fernandes, M.  fiduciary duties, breach of – fiduciary responsibilities  finance, access to –, ,  see also microfinance and microfinance institutions (MFIs)

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 financial performance , , n, , , , ,  see also corporate environmental performance (CEP) and corporate financial performance (CFP) Finland , n,  firm heterogeneity  firm size  firm value  flexible purpose corporation  flexible rules  focus strategy/focused differentiation  Foley, J.  food industry  food waste reduction  forestry industry , ,  deforestation ,  Forest Stewardship Council , , ,  formal job responsibilities  for-profit organizations – Fortune  companies  Fortune  companies , , , t, ,  Fortune Magazine Most Admired Companies data ,  Foxconn suicides  France , , , ,  FranklinCovey  fraud , , – freedom of speech (including hate speech)  free-rider problem  Friends of the Earth (FOE) , ,  FTSEGOOD Index , , ,  FTSE  companies , t fundamentalism ,  future business model 

G

Gap Product RED campaign  gate-to-gate vs. lifecycle measures  gender equality , –,  GeoCosmo (US) ,  Georgia Power  Germany , f, ,  Ghana , , ,  Gifford, K.L. 



GlaxoSmithKlein  Global  most sustainable companies in the world  Global Entrepreneurship Monitor (GEM) , , – Global Exchange  Global Fortune  index t Global Reporting Initiative (GRI) , , , , , ,  archival datasets , , t mandatory corporate sustainability reporting , ,  MNCs in Africa , ,  social movements  global supply chains –,  global sustainability challenges  global warming and climate change , , – see also greenhouse gas (GHG) emissions GLOBE project  goals shared ,  superordinate –, ,  see also Sustainable Development Goals (SDGs) under United Nations Goldman Sachs - , Women – Google - provision of private data to US state agencies  governance information see environmental, social and governance (ESG) information government and corporate social irresponsibility (CSiR)  interventions and corporate environmental and financial performance link  local  officials  role in environmental management and strategy  Grameen Bank , ,  Grameen Phone t green behaviors ,  ‘green bonds’  green consumerism ,  ‘green glossies’  green goodwill 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





greenhouse gas (GHG) emissions ,  archival datasets – carbon dioxide –, – chloroflurocarbons  corporate environmental and financial performance link , – environmental management and strategy – mandatory corporate sustainability reporting  methane  nitrous oxides  ozone  volatile organic compounds  Greenland and North Pole  Green parties  Greenpeace , , –,  green screening  greenwashing ,  backfire effects , –, , , – corporate social irresponsibility (CSiR) , t, , , – environmental law  environmental management and strategy  mandatory corporate sustainability reporting  profit-with-purpose corporations , ,  rhetorical strategy 

H

habitat destruction  Haiti –,  hard law ,  harmonization ,  harms and benefits, potential – unintended ,  see also avoidance of harm health and safety standards  heavy metals emissions to water, soils and air  high-cost activities  Hindustan Lever (India) , ,  HMSHost Corporation –

holistic approach –,  Homebase , –,  Home Depot , , , , –, , –, –, –, –,  homelessness  see also New York and New Jersey Port Authority and homelessness issue Honduras  Hong Kong ,  human capital  humanistic research agenda  humanitarian aid see best practices from humanitarian aid to evaluate CSR humanitarian catastrophes  human resource practices  human rights issues , ,  base of pyramid (BoP) proposition ,  emerging markets ,  social movements , , , ,  hypocrisy ,  perceived  hypothesis confirmation bias 

I IBM CSC scheme  Smarter Cities initiative  Iceland , t ICT industries , , –t, –, ,  identification with CSR practices –,  identification, organizational , ,  identity  and control  protection  shared  threat  see also social identity theory illegal behaviors ,  see also corruption; fraud; white-collar crime impact assessments  impact of CSR , , ,  positive  implicit CSR , , , , ,  impression management theories 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 incineration – income equality  incremental innovation see product stewardship India , , , , , ,  individually-directed organizational citizenship behavior (OCB-I) , , , ,  Indonesia , ,  industrial clusters –,  industrialization and division of labor  industrial organization literature , –,  industrial solvents  industry norms  influencing others –t, , ,  informal and illegitimate markets  informal institutions  information  access to  asymmetries , – disclosure , –,  quantitative and qualitative  rights  source credibility  in-group vs. out-group dynamics  initiatives , –,  initiative, taking t, , ,  innovation , ,  creative  P – team  see also responsible innovation Inspiration Kitchens t Institute for Economic Empowerment of Women  institutional contestation (rhetorical strategies) , –, , –, – , – Institutional Shareholder Services  institutions and CSR , – co-evolution –,  comparative CSR literature – comparative institutional analysis ,  configurational approach – conformity  education 



formal institutions t,  historical institutionalism –, , ,  impact of institutions on CSR – implications for research – implicit CSR , ,  indigenous perspectives ,  informal institutions t, ,  institutional change – institutional convergence  institutional norms  intersection of institutions and CSR – isomorphism  levels of institutions used in CSR t multi-country institutions  political CSR  rational choice institutionalism , ,  self-interest , ,  sociological institutionalism ,  types of institutions and levels of analysis – Varieties of Capitalism , ,  various domains of CSR – voluntary (explicit) forms of CSR , , , ,  see also under emerging markets instrumental CSR –,  instrumental-strategic benefits  integrated reports  integrated social contracts theory (ISCT) – integration-and-learning perspective  integrative principles  integrity  see also self-integrity intended beneficiaries  intentions to remain (with employer) ,  see also recruitment and retention Inter-American Development Bank  interdependence ,  intergovernmental agreements and initiatives  internal consistency/convergence assessment  internally directed CSR , , –

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





internally-directed organizational citizenship behavior (OCB) ,  International Baby Food Action Network (IBFAN)  international certification schemes t,  International Labor Organization -  Decent Work Agenda n international standards  International Standards Organization (ISO)     , ,  Internet Archive ,  Involvement Corps  issue-based advocacy organizations  Italy  societá benefit  it ‘pays to be green’ 

J

Japan , f, t, t, , ,  job attitudes and behaviors  job design research ,  job opportunities  job performance , , ,  corporate volunteering  employee behaviours as  in-role  supervisor ratings  job satisfaction , , , ,  job seekers , , , ,  backfire effects , , t, –, , ,  see also under psychology of CSR Johnson & Johnson  Jordan t JPMorgan Chase t,  justice theories and principles , , 

K

Kenya , , ,  key performance indicators (KPI) – Kinder, Lydenberg and Domini Index (KLD) , ,  archival datasets , –, , , , t CEP-CFP relationship t

corporate social irresponsibility (CSiR) –, – strategy and sustainability  see also MSCI KIND Fruit + Nut bars  King, M.L.  kinship value of work –, , , , , , ,  Kiva t Knod  knowledge , ,  increased  limited  KPMG t,  Kyoto Protocol () 

L

labor standards and worker protection , –, , ,  land stewardship  Latin America , , , ,  Laughton, H.  leadership  responsible , , ,  skills  visionary  Lebanon  legal responsibilities , ,  legitimacy  emerging markets  enhanced  environmental law –, – institutional influences ,  multinational corporations (MNCs) in Africa social ,  social movements ,  theory  license to operate , ,  Liechtenstein , t lifecycle analysis (LCA)  limited-access order (LAO) –,  limited information model  Live Well  lobbying t, , , , ,  Loowatt , t lose-lose outcome 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 Love Canal environmental disaster , ,  low-cost activities  loyalty ,  Luck Companies , , , , ,  Values Based Leadership (VBL) ideology and model 

M

Maalouf, E. – McKenzie –, , ,  Madagascar – Madécasse –, t Malawi - PUR water tablets  Malaysia  mandatory corporate sustainability reporting –, –, –, t, , – management  see also environmental management and strategy; stakeholder management Management Discussion and Analysis  mandatory corporate sustainability reporting – auxiliary analysis – Bloomberg sample –,  China –, –, , , t, , , – comparability of information –, t, t, , t, – comply or explain clause ,  credibility of information –, t, t, , t,  data and sample – Denmark –, –, , , t, , – differences-in-differences analysis  disclosure t, t,  environmental reporting  environmental, social and governance (ESG) information , , , t, ,  disclosure , –, , , t reporting guidelines  firm time-varying characteristics t firm value , , t, , t



historical background and disclosure regulations – hypotheses development – Malaysia –, –, –, t, , – negative externalities  negative screening  propensity score matching procedures , t reliability  research design – results – alternative control samples  alternative matching procedures – conditioning on level of disclosure before disclosure regulation –, –t control firms from countries of same legal origin –t effects on corporate reporting and value – ESG disclosure, impact on t ESG disclosure for treated and US control group f ESG disclosure for treated and worldwide group f governance disclosure as control variable – impact on assurance and propensity to adopt GRI reporting guidelines t instrumental variables analysis - impact on assurance and propensity to adopt GRI reporting guidelines, impact on Tobin’s Q in second stage –t instrumental variables analysis - impact of Tobin’s Q in second stage controlling for governance disclosure t pseudo-events – robustness tests – social reporting  South Africa –, –, –, t, , , – Tobin’s Q –, , t, –, , , , t, , 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





mandatory corporate sustainability reporting (cont.) transparency , , , ,  triple bottom line (economic, environmental and social performance)  United States control group –, , , , t, t, , t, , t,  without time-varying firm characteristics t worldwide sample of control firms –, , t, t, , t, , t,  manufacturing sector , , –t, –,  market-based approaches  marketing research  Martinez, L. – materiality matrix  MeadWestvaco , , , , ,  meaning (empowerment) ,  meaningful work , –,  accuracy  agency  assessments – attributions employees’ agreements with expectations, assessments and attributions – employees’ identification with target of attributions – employees’ perceived control over harms and benefits – employees’ perceived personal growth through CSR involvement – character of firm  collective control over harms and benefits  comprehensiveness  contextual factors  dynamic influence of CSR – educational, life and work experiences  expectations , –, , ,  extrinsic, service and kinship value of work  feedback, negative and positive  hardiness research  historical behavior 

individual differences – intrinsic motivation  intrinsic value , –, , ,  judgments of stakeholders  occupational identification  outcomes  positive meaning , ,  responses , –,  uncertainty and CSR effectiveness – workplace antecedents – see also boundary conditions on effects of CSR on meaningful work membership organizations – Menards –, – methane  Mexico , , , ,  micro CSR and human resource management – micro-enterprises –, –, , –, , ,  see also microfinance and microfinance institutions (MFIs) microfinance and microfinance institutions (MFIs) ,  base of the pyramid proposition (BoP) – commercialization  entrepreneurship by and for disadvantaged populations ,  individual lenders  solidarity group lenders  village banks  see also Grameen Bank Microsoft - YouthWorks  mining see extractive industry minorities and ethnicity –, – mission drift ,  mission statement companies , ,  mixed external and internal CSR measures  moral behavior and conduct ,  moral considerations  moral development theory  moral emotion  moral identity  moral implications  moral intuition  moral legitimacy of business 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 moral obligation  moral reasoning  Morocco  motivation , , , ,  theory  motives ,  egoistic-and stakeholder-driven  extrinsic – genuine  intrinsic – other-serving (intrinsic or substantive) – pro-social  self-oriented  self-serving  self-serving attributed ,  MSCI , , , –, –, ,  archival datasets , , , , , t MTN Group ,  multinational corporations (MNCs) corporate volunteering  emerging markets – institutional influences ,  responsible innovation –,  social movements ,  see also multinational corporations (MNCs) in Africa multinational corporations (MNCs) in Africa , – business development services  capacity-building and training programs  competitive advantage and economic benefits  corporate colonialism  cultural and socio-economic factors  current opportunities and challenges – economic and philanthropic responsibilities ,  economic and political factors  educational scholarships  enforced entrepreneurship  enterprise development  entrepreneurial training, education and skills development initiatives , – external factors  financial interventions 



firm clustering opportunities  formalization of business environments  grassroots innovativeness  historical factors  humanist African philosophies (eg Ubutu)  identification, recognition and exchange of entrepreneurial ideas – internal factors  intervention programs  job creation  Judaeo-Christian values  legal and ethical responsibilities  micro-enterprises –, –, , –,  NGOs , ,  opportunity entrepreneurs  power and legitimacy  private-public partnerships  private sector  promotion and funding of CSR entrepreneurship (CSRE) tools , – reporting by independent third parties  select MNCs with CSR programs supporting entrepreneurship t self-tracking and reporting  skills improvement  small and medium-sized enterprises (SMEs) –, –,  social entrepreneurship (SE) projects  social services provision – targeted collaborations and resources to scale up promising entities – tracking and reporting – transnational factors  transparency, accountability and sustainable development  wage incentives 

N

Nader, R.  naming and shaming ,  NASDAQ  t national aid and development agencies  National Business Systems , 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





National Center for Voluntary Action  national development goals and priorities  nationalism ,  natural resource-based view (NRV) , –t, –,  natural resources , – see also extractive industries Natural Resources Defense Council (NRDC) ,  negative impacts of CSR  neoclassical economics ,  Nescafé - Get Started campaign (Central and West Africa)  Nestlé , , t, , ,  Creating Shared Value Forum/Prize  Global Youth Initiative  infant milk formula and breast-milk substitutes ,  Maggi Mammies  My Own business (MYOWBU) program – readiness-for-work training  Nestlé Professional – Nestlé South Africa  Netherlands  network connections, enhanced  network theory  new developments – entrepreneurship/social entrepreneurship – environment and sustainability – ethics and responsibility – micro CSR and human resource management – strategy and governance – Newman’s Own , , , t new product development – New York and New Jersey Port Authority and homelessness issue –, ,  New Zealand Sustainability Council  Nigeria , , ,  Nike , ,  nitrous oxides  Nixon, R.  non-governmental organizations (NGOs) base of pyramid (BoP) proposition – emerging markets , , 

institutional influences  multinational corporations (MNCs) in Africa , , , ,  responsible innovation  social movements , , , ,  strategy and sustainability  non-stochastic dynamic macro-economic model  Nordic countries  normative contestation (rhetorical strategies) ,  norms and standards –, ,  environmental  social  North America , t,  see also Canada; United States Norway , , , t not-for-profit (NFP) organizations or charities , , , – ‘Not In My Backyard’ (NIMBY) syndrome  NVivo 

O

Occupy Wall Street – OneWorld Health t open-access order (OAO) –,  openness , , ,  opportunity seekers, integrators and entrepreneurs , , ,  organizational citizenship behavior (OCB) , –, ,  client-directed , t, , – environmentally-directed , , –, ,  externally-directed –, , ,  individually-directed , , , ,  internally-directed ,  task-directed/proactive , ,  organizational commitment , ,  organizational denigration –, , , ,  organizational design and structure  organizational identification , , ,  organizational identity contestation (rhetorical strategies) , –, , –, –

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 organizational justice  organizationally-directed organizational citizenship behavior (OCB) , , – organizational members  organizational pride  organizational redemption –, –, – organizational social responsibility movement  Organization for Economic Cooperation and Development (OECD) , , ,  Organizations and the Natural Environment (ONE) Interest Group , – ostracism  outreach/education behaviors  outsourcing and corporate volunteering  oversight methods and bodies , , , ,  ownership –,  and control separation  ozone 

P

P innovations – Paris Climate Accord ,  Paris Declaration of Aid Effectiveness , , f, , , , ,  Patagonia (clothing company) ,  paternalism  path dependency ,  Payless Cashway , – peer-to-peer-based activity  People for the Ethical Treatment of Animals (PETA) , , – perceived CSR  perceptions , , , , , , , ,  performance archival datasets  backfire effects ,  corporate social irresponsibility (CSiR)  corporate volunteering  economic  environmental , , n, , , ,  financial , , n, , , ,  goals  happiness-based 



social , , , n, ,  socio-environmental ,  strategy –, , ,  see also corporate environmental performance (CEP) and corporate financial performance (CFP); corporate social performance (CSP); job performance personal goals and preferences , ,  personal growth and learning , ,  personal values  petroleum industry  philanthropy/philanthropic activities ,  corporate volunteering – emerging markets , , ,  marketized  social  Philippines  Phillips Lighting – planetary boundaries  Points of Light – political CSR , ,  political projects  political theory  pollution atmospheric –,  control –, – initiatives ,  voluntary – corporate environmental and financial performance link  corporate social irresponsibility (CSiR)  environmental law  responsible innovation  strategy and sustainability  population ecology – populism  Portuguese Africa  positioning school , – Potlatch Corporation – poverty reduction  power ,  access to  institutional influences  multinational corporations (MNCs) in Africa  organizational and societal differences 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





precautionary principle – prestige ,  pride , , , , ,  principal-agent problem  principal component analysis  private provision of public goods  private-public partnerships  private sector  private-sphere environmentalism  private voluntary standards  proactive organizational citizenship behavior (OCB)  proactive strategies , , ,  problem salience – problem-solving  Procter & Gamble  product characteristics  evaluations  quality ,  safety ,  stewardship , – production economics models  production possibility frontier ,  production theoretic approach  pro-environmental behaviors  professional assertiveness  profit-with-purpose corporations , – ad hoc notes  benefit corporations , ,  business judgment rule ,  buy-backs or change of control situation  characteristic features - intent/purpose, director duties and reporting t common purpose left open, but designed for enforceability – co-regulation  CSR commitments dependent on constancy among shareholders – CSR policy companies , t definition – designing legal conditions of CSR – differences from other organizational forms with social purpose t environmental purpose companies – external standards 

flexible purpose corporation  for-benefit enterprise  ‘fourth’ or ‘gray’ sector  general social impact  limits of previous legal framework, addressing t material public benefit  meso-level  micro-level  mission-lock to stabilize CSR commitments beyond changes in shareholders  mission statement companies , t motivation for development: limits in existing frameworks – multi-party contracts  new research agenda – devices, tools and operation  empirical confirmation  law and CSR – obligations  oversight and accountability methods , ,  public benefit corporations , – purpose: missing piece in CSR-oriented theory of corporation – purpose as clarification of management mandate – safe harbor – socially responsible directors exposed to risk of legal action  social purpose corporations –, t, , –,  solidarity non-profit organizations , t special purpose companies , , , – specific accountability procedure for directors – specific impact  supporting responsible leadership at corporate governance level – unaccountability of company directors, risk of  unilateral commitment  voluntary initiatives and enforceability mechanisms, difficulty of combining –

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 propaganda  prosocial behavior  prosocial motives  prosocial personality ,  prosocial values ,  protests –, ,  proto-institutions  proximal-embedded CSR  proximal-peripheral CSR  proximal stakeholders –, ,  proximity dimension , – proxy resolutions  psychology of CSR , – appearance  awareness of CSR: levels and effects – consumers – employees  job seekers  awareness, implications of and future research needs – implications for practice – measurement of knowledge and awareness – specificity and depth of knowledge and awareness – beliefs about CSR-corporate ability tradeoffs  beliefs and attitudes about company  characteristics of company  compassion  education and awareness training  emotional exhaustion  events – extra-role performance and citizenship behaviors  friendships  ‘how’ stakeholders respond to CSR – consumers – employees – job seekers  manipulations ,  measurement approach – negative stakeholder responses  practices ,  referral intentions  reflective measures n service evaluations 



stakeholders’ CSR evaluations – awareness, and knowledge – consumers – employees – job seekers  perceptions and appraisals , – story-telling  support  turnover intentions ,  ‘when’ stakeholders respond to CSR – consumer responses t C-S-R (care-based, self-protective and relational-status) considerations framework , t,  employee responses t job seeker responses t ‘why’ stakeholders respond to CSR – consumer responses t, – C-S-R (care-based, self-protective and relational-status) considerations framework –, t employee responses t, – jobseeker responses t,  public attitudes  public benefit corporations , – public goods, private provision of  public relations  public right to know  pure ‘taste’ effect 

Q

qualitative methods , ,  quantitative methods 

R Rainforest Action Network’s (RAN) campaign in retail home-improvement industry , , –, –, f, –,  Rana Plaza  randomized controlled trials – rank-and-yank performance review system  rare earth metals, recycling of  reactive strategies , ,  recruitment and retention of employees , , , , , 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





reduce, reuse, recycle (Rs) , , , , –, , ,  regulations  command-and-control , ,  indirect  regulatory capture  regulatory contestation (rhetorical strategies)  relational status considerations , , , , , , ,  reliability , , ,  R.E.M.  renewable energy , ,  reporting , ,  environmental  external  integrated –,  mandatory annual financial  social and environmental  sustainability  triple-bottom line  voluntary  see also Global Reporting Initiative (GRI); mandatory corporate sustainability reporting; self-report measures reputation/reputational , , , ,  backfire effects –,  corporate environmental and financial performance link –, ,  corporate social irresponsibility (CSiR) , ,  corporate volunteering  emerging markets  environmental management and strategy  environmental responsibility  institutional influences  internal stakeholder  management  mandatory corporate sustainability reporting  profit-with-purpose corporations  rhetorical strategies (activists) –, ,  social ,  social movements ,  stakeholder management , 

research and development (R&D) – researcher institutional logics as metatheoretical concerns – resource-based view (RBV) –, , , , ,  see also natural resource-based view (NRV) resource consumption, reduction of  resource curse  resource dependence theory – resource scarcity  respect  perceived  responsible business and individual differences see employee externallydirected citizenship; green behaviors Responsible Care Initiative  responsible innovation , – agriculture and extractive industries , –t, – business as facilitator of – challenges and opportunities in different economic sectors – co-creation  decentralization  decent work  dual use of innovation  eco or green innovation  future research agenda –, t ICT industries , , –t, –, ,  major CSR/sustainability challenges t manufacturing and construction , –t, – negative externalities  openness/closure balance  post-national constellation  potential for responsible innovation t privacy  profit-with-purpose corporations  reflexivity  responsible governance and leadership as catalysts for successful innovation –,  Responsible Research and Innovation (RRI) framework – services and banking industry , –t, –, , 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 sharing economy , –t, –, ,  social innovation and entrepreneurship ,  social and technological innovation  sustainability-oriented innovation  sustainable development goals (SDGs) , , t, –, ,  technological innovation , ,  responsible leadership , , ,  responsible risk management procedures  responsible sourcing  retail food industry  rhetorical strategies (activists) , –  Lumber , – aggregate dimension , –t, f,  axial coding  coding  collective identity contestation , –, , –, , , – data analysis and theory development  data structure f devaluation  emotional arguments –,  findings – first-order codes –, –t, f Homebase , –,  Home Depot –, –, –, –,  ‘how’ strategies are used ,  identities (managerial cognitive structure) – inferences  institutional contestation , –, , –, –, – institutions (managerial cognitive structure) – interpretive approach  issue objectification –,  issue sensationalization –,  logical arguments –,  managerial perception change  meaning systems  media coverage  Menards –, – methodology –



normative contestation ,  organizational denigration –, , , ,  organizational identity contestation , –, , –, – organizational redemption –, –, – Payless Cashway , – process – progression from text blocks to aggregate theoretical dimensions –t prominent activists  qualitative inductive methodology , ,  Rainforest Action Network’s (RAN) campaign in retail homeimprovement industry , , –, –, f, –,  regulatory contestation  reliability  reputational pressure –, ,  second-order codes , –t, f self-definitions  socio-political rules of behavior ,  strategies –, – text blocks , , –t,  theoretical background – validity  ‘what’ strategies are used ,  Wickes ,  ‘right thing to do’ argument  right-to-know provisions  Rio Earth Summit () - Agenda  –,  risk , , ,  rivalry  RobecoSAM Corporate Sustainability Assessment (CSA) , , –, , t Rockefeller, J.  roundtable on sustainable palm oil (RSPO)  Rowntree, J.  Royal Dutch Shell  rule of law  rule-making procedures  Russell  index , t Russell  index , , t

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





Russell Athletics  Russia ,  Rwanda , 

S

S&P  companies , t, , , , t Safal Group  safe harbor provisions – Samasource  same-sex marriage equality  sanitary landfilling  sanitation program  SAP t Emerging Entrepreneur Initiative  Scandinavia  scientific and technical information, limitations of , –,  self-concepts ,  self-determination ,  self-efficacy  self-employment and disadvantaged populations , , , ,  self-government  self-integrity ,  self-interest , , , , , , ,  self-protective considerations , , ,  self-ratings  self-regulation , , , , ,  self-report measures , ,  self-serving attributed motives ,  self-transcendent values  sensemaking processes  Serbia , t service level agreements  services industry , –t, –, ,  service value of work –, –, , ,  Seventh Generation and Generation Good  Seveso disaster  sexual harassment  sexual orientation  shared vision  shareholders , , , ,  share prices – sharing economy , –t, –, ,  Shell ,  Shir Mahila Griha Udyog Lijat Papad t

short-termism  Sierra Club , ,  signaling theory  Singapore  single CSR episode or event  ‘sin stocks’ (tobacco, alcohol firearms industries)  skepticism , –, , , ,  skill(s)  development ,  sets and knowledge repertoires  small and medium-sized enterprises (SMEs) , –, , –, –,  smog  Social Accountability International - SA Certification Standard  social aspects see triple-bottom line (economic, social and environmental) aspects social capital  social categorization ,  social costs  social entrepreneurship –, – across context – bricolage –,  corporate initiatives –, – education  efficacy and effectiveness  and governance  models addressing disadvantage –t multinational corporations (MNCs) in Africa  as organizing for multiple goals – problem attribution – problem salience – research gaps and opportunities – scaffolding  social problems as point of departure , – work integration and social enterprises (WISEs)  social and environmental benefits  social, environmental and ethical issues , , , , , –,  green behaviors  strategy externalities –

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 ‘separated’ world of CSR – sustainable organization and necessity to redefine strategy – social and environmental goods  social environmentalism  social and environmental issues , , –, , ,  see also social, environmental and ethical issues social and environmental missions  social and environmental performance ,  social and environmental practices –, , ,  social and environmental problems –, – social and environmental reporting  social exchange relationship  social exchange theory  social good  social identity theory –, ,  social implications  social information see environmental, social and governance (ESG) information Social Investment Forum (SIF)  social investment ratings  social issues , ,  Social Issues in Management (SIM) Division of Academy of Management (AOM)  social legitimacy ,  social license analysis – socially-oriented initiatives ,  socially responsible investments  socially responsible practices  social marketing  social media technologies and internet , , – social movements –, – accountability ,  adaptability – anti-apartheid (South Africa) – anti-corruption  auditors see monitors and auditors below boycotts , , ,  business-society relationships –, ,  challenges –



civil society groups , , , ,  collaborative engagement –, , ,  compliance ,  contentious strategies  co-optation – corporate citizenship  disembedding of economic practices  double movement  ecology of  efficacy  emerging markets – environmental issues , –, , , , , ,  foreign politics, interference in  human rights issues , , , ,  illicit goods and services  infant milk formula and breast-milk substitutes (Nestlé)  insider strategies –, , , ,  institutional perspective  labor standards and worker protection –, , ,  legal or scientific expertise  legitimacy , ,  monitors and auditors , , ,  naming and shaming ,  natural resources and extractive industries in developing countries – new social media technologies and internet – new strategies – NGOs , , , ,  norms, standards and frameworks  organizational social responsibility movement  outsider strategies (extra-institutional) –, , , ,  position of in CSR field  private voluntary standards  professionalization  protests –, ,  proxy resolutions  reputation ,  resources and efficacy ,  social issues , ,  social network analysis 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





social movements (cont.) social philanthropy  sociological context – supply chain codes of conduct  sustainability  sweatshop labor – voluntary CSR standards , , ,  work integration  social network analysis  social norms  social organizations  social performance , , , n, ,  see also corporate social performance (CSP) social philanthropy  social purpose corporations –, , , t, , –, –,  social relationships  social reputation ,  Social Return on Investment (SROI)  social status  social and technological change  social welfare ,  societal disillusionment  societal negligence  socio-political rules of behavior ,  Socrates database  soft law , , ,  solidarity non-profit organizations , t solid wastes –,  Soliguide – source reduction – South Africa , , ,  archival datasets  Department of Small Business Development  Department of Trade and Industry  emerging markets  Integrated Reporting Committee  Johannesburg Stock Exchange (JSE) , – King Code of Governance  King Reports (I-III) on Corporate Governance  mandatory corporate sustainability reporting –, –, –, t, , , –

Sullivan Principles/Global Sullivan Principles – Spain , t, t,  special purpose companies , , , – specific CSR program or initiative  sporting goods companies  stakeholder management , , – affiliation with particular organizations as a benefit  basic principles – brief commentary – corporate environmental and financial performance link  economic power  enterprise strategy – fairness  firm’s purpose  formal (contractual or regulatory) power  future work – grassroots efforts  Home Depot , , , , –,  identification of stakeholders – interviews – are firms moving in direction the paper describes?  executives and companies – how would the article have been written differently? – initial reactions to the paper – is firm measuring performance more broadly? – strengths of the paper – weaknesses of the paper – Luck Companies , , , , ,  McKenzie –, , ,  manager time – maximizing stakeholder value – MeadWestvaco , , , , ,  moral principles  opportunity costs ,  perception – political power  reputation ,  societal expectations  strategic choice 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 SunTrust Banks , , , , – tangible or intangible resources –,  Unum Group , , , , , ,  values , , – stakeholder(s) analysis ,  -directed practices  distal – environmental  expectations , ,  external , ,  groups  interests  internal n, ,  needs and analysis  non-social  -oriented principles  profit-with-purpose corporations ,  proximal –, ,  reaction, negative  responses ,  social  supplier-oriented  theory , –, , – view  see also under psychology of CSR; stakeholder management standard-setting organizations ,  standards, voluntary , , , ,  Starbucks ,  state or trait level phenomena  static portfolio model  steady state economy  stereotyping ,  stewardship theory –, , ,  stochastic frontier analysis (SFA)  Stone, O.  STOXX  t strategic CSR , ,  environmental  see also strategy strategic environmental management (SEM) capabilities –, , – market – public policies – values and beliefs –, 



strategic management approach  see also strategic environmental management (SEM) capabilities strategic proactivity  strategic (profit-maximizing) motivations  strategy – accountability , , ,  circular economy principles  competitive advantage , , ,  content analysis – courses of action  culture  definition – development and implementation  economics – employee motivations  environment – evolutionary school ,  exploring why and in what way firms differ  firm performance enhancement in context of international competition  firms – framing  and governance – incentive structures  individual firm behaviour  internal organization – leadership, role of  license to operate  long-run goals and objectives  loose coupling  low cost and differentiation  making choices  managers and owners – performance –, , ,  population ecology – positioning school , – proactive , , ,  reactive , ,  resource-based view (RBV) ,  resource dependence theory – resources – separation fallacy , ,  short-termism 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





strategy (cont.) social, environmental and ethical issues , , , , , –,  externalities – ‘separated’ world of CSR – sustainable organization and necessity to redefine strategy – stakeholder theory – stewardship , ,  strategic factor markets  strategic initiatives – sustainable development strategies  theoretical implications and limitations – transparency , , ,  see also environmental management and strategy sub-Saharan Africa  SunTrust Banks , , , , – supply chain codes of conduct  supply and demand model  surveillance capitalism  surveillance councils  surveys  Sustainability Asset Management Group ,  Sustainability Department  sustainability/sustainable development –,  assessments  certification program  and corporate environmental and financial performance link  corporate social irresponsibility (CSiR)  emerging markets , ,  employee externally-directed citizenship  employee green behaviors  and environmental law , , , – environmental management and strategy  and extreme poverty – fraud , t indices  institutional influences , – managers ,  multinational corporations (MNCs) in Africa  organization 

practices ,  product choices  profit-with-purpose corporations  reporting  see also environmental reporting; mandatory corporate sustainability reporting social movements  strategies  value framework  vision  see also Sustainable Development Goals (SDGs) under United Nations Sustainable Investment Research International (SiRi) – Sustainalytics , , , , , , t, , t Sustainability Global Platform (SGP) – sweatshop labor – Sweden n,  Switzerland , , t Syngenta 

T

Tanzania  targeting the community  task characteristics – task-directed/proactive organizational citizenship behavior (OCB) ,  task-relevant information and perspectives  task significance  Tata, J.  taxes , ,  Team Production theory ,  technical/task performance  Thailand  theory fragmentation  third parties ,  third sector , , –,  see also not-for-profit (NFP) organizations or charities Thomson Reuters  threat of new entrants  Timberland  TMT , ,  tobacco companies: stigmatization and distrust , , , 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 Tobin’s Q , –, , t, –, , , , t, ,  Tom’s Shoes , , t Total Sustainability Score  toxic reduction  Toxic Release Inventory (TRI) , t, , ,  Trade Aid t tradeoff hypothesis , – Trader Joe’s – Daily Table  tragedy of the commons  training needs analysis  transaction costs  transnational corporations (TNCs) see multinational corporations (MNCs) transparency ,  corporate social irresponsibility (CSiR) ,  mandatory corporate sustainability reporting , , , n, ,  multinational corporations (MNCs) in Africa  profit-with-purpose corporations  strategy , , ,  Tree Adoption Uganda  Triangle Residential Options for Substance Abusers t triple-bottom line (economic, social and environmental) aspects , , ,  Trucost Environmental Performance scores , , –, t Trump administration  trust , , , , , ,  backfire effects , ,  corporate social irresponsibility (CSiR)  strategy and sustainability  Tunisia 

U

Uber  Uganda , ,  uncertainty and CSR effectiveness – Unilever , , , t Technical Assistance Initiative Summits (East and West Africa) 



women entrepreneurship  Young Entrepreneurs Awards  see also Hindustan Lever (India) United Kingdom ,  Anti-Apartheid Movement  archival datasets , t backfire effects  Big Society  Companies Act ()  corporate volunteering ,  emerging markets  employee externally-directed citizenship  mandatory corporate sustainability reporting , ,  profit-with-purpose corporations  ‘ragged’ schools n United Nations  Children’s Fund (UNICEF) - Building Young Futures project  Conference on Trade and Development (UNCTAD)  Environment Program (UNEP) , , ,  Framework Convention on Climate Change (UNFCCC)  Global Compact , , ,  emerging markets ,  institutional influences t,  mandatory corporate sustainability reporting  MNCs in Africa , ,  responsible innovation  social movements , ,  strategy and sustainability  Haiti  Millennium Development Goals (MDGs)  Principles in Responsible Management Education  Sustainable Development Goals (SDGs) , –, ,  diversity and CSR: top management team/board/workforce , –t, , –t, , , – emerging markets  institutional influences 

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi





United Nations (cont.) profit-with-purpose corporations , n responsible innovation , , t, –, ,  tripartite framework on business and human rights  Women ,  United States , , ,  American Bar Association  archival datasets , , , , –t backfire effects  benefit corporations ,  California Corporations Code  cleantech sector  constituency statutes  corporate environmental performance (CEP) and corporate financial performance (CFP) t, t, t, t corporate social irresponsibility (CSiR) ,  corporate volunteering , ,  disadvantaged populations , ,  electric utility industry  emerging markets , ,  environmental law  environmental management and strategy , f, , –, , – Environmental Protection Agency, Green Lights  Environmental Protection Agency (EPA) –, ,  explicit CSR  institutional influences ,  mandatory corporate sustainability reporting –, , , –t, , t, , t,  New York and New Jersey Port Authority and homelessness issue –, ,  OTC Bulletin Board  ‘pink sheet’ market  Pollution Prevention Act – profit-with-purpose corporations –, , – Resource Recovery Act ()  rhetorical strategy  Rotary and Lions’ Clubs  Sarbanes Oxley Act  

Securities Exchange Act ()  Securities and Exchange Commission (SEC)  Silicon Valley  social movements ,  stock exchange  strategy and sustainability n Superfund Amendments ()  Toxic Release Inventory scheme  Unum Group , , , , , , 

V

validity , –,  see also construct validity value chain activities, outsourced  value creation ,  value-driven motives ,  value fit ,  values  corporate environmental performance (CEP) and corporate financial performance (CFP) – corporate social irresponsibility (CSiR)  cultural  personal  prosocial and environmental ,  self-transcendent  shared ,  see also kinship value of work; service value of work Vanderbilt, C.  Varieties of Capitalism , ,  Vicarious (US) ,  Vietnam ,  Vietnam War – visionary leadership  Vodafone ,  volatile organic compounds  Volkswagen Dieselgate , ,  voluntary contributions equilibrium for public goods  voluntary (explicit) forms of CSR , , , ,  voluntary pollution control – voluntary practices in emerging markets , , , ,  voluntary (proactive) green behaviors –

OUP CORRECTED PROOF – FINAL, 20/9/2019, SPi

 voluntary reporting  voluntary standards , , , ,  voluntary structures ,  volunteering see corporate volunteering volunteer programs and charitable donations , t, , ,  vulnerable populations ,  see also entrepreneurship by and for disadvantaged populations

W

wage equality ,  ‘warm glow’ in green consumerism – waste emissions reduction  general  intensity  management, responsible  production as by-product of business activity – water use and water purification , ,  Watjen, T.  Watkins, M.  wealth creation and profits  welfare schemes  well-being and physical health ,  Wells Fargo incident  Wharton Research Data Services (WRDS) ,  white-collar crime  Wickes ,  Wildbiene + Partner (Switzerland)  willingness to pay , , ,  win-win scenarios , , ,  base of pyramid (BoP) proposition ,  corporate environmental and financial performance link ,  women and child labor 



Women’s Empowerment Principles Gap Analysis Tool (WEPs Tool) ,  work engagement  work environments, favorable ,  worker protection , –, , ,  workers’ rights – working conditions , , , –, –, , ,  sweatshop labor , – women and child labor ,  work integration and social enterprises (WISEs)  work interests and values  work motivation theories n workplace antecedents – workplace training programs  World Commission on Environment and Development - Our Common Future (Brundtland Report) ,  World Competitiveness Index  World Economic Forum ,  World Health Organization - International Code of Marketing of Breast-milk Substitutes  World Trade Organization ,  World Wildlife Fund (WWF) ,  North America Forest and Trade Network –

X

Xerox 

Y

YouTube  Yunus, M. , , 

Z

Zambia ,  Zimbabwe 